[Congressional Record (Bound Edition), Volume 151 (2005), Part 7]
[Senate]
[Pages 9511-9613]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. JEFFORDS:
  S. 1011. A bill to establish a national historic country store 
preservation program; to the Committee on Commerce, Science, and 
Transportation.
  Mr. JEFFORDS. Mr. President, I have long been a proponent of measures 
that support historic preservation and economic development, and it is 
in keeping with that tradition that I rise today to introduce the 
National Historic Country Store Preservation Act of 2005.
  This bill establishes a national program to support historic country 
store preservation that will aid in the revitalization of rural 
villages and community centers nationwide.
  For many Americans, the country store invokes an image of a simpler 
life before much of this country became stamped with shopping malls and 
the ``big-box'' store.
  But for thousands of people living in Vermont and for millions more 
living in rural communities across the United States, a visit to the 
local country store is a regular part of one's daily life.

[[Page 9512]]

  They are centers of commercial activity in the towns they serve and 
embody the core of American small business entrepreneurship.
  Many of these vital small businesses have been passed down among 
family members for generations. They are operated in buildings that 
have existed for as long as 150 years.
  In fact, by one of the more vigorous standards in Vermont, a country 
store is only considered historic if it was built before the Winooski 
River Flood of 1927.
  In my hometown of Shrewsbury, VT, the Pierce Store was the hub of our 
small community when my wife Liz and I settled there in 1963.
  Run by the four Pierce siblings, Marjorie, Glendon, Marion and 
Gordon, the store was the place to go for a neighborly chat as much as 
for your milk and butter.
  Children would get off the bus to buy their penny candy. Glendon 
Pierce could tell a great tale, and the political banter was endless.
  With its antique cash register and woodstove, this was the 
quintessential general store.
  Unfortunately, the Pierce Store closed its doors some years back and 
Shrewsbury lost a vital part of its identity.
  There has been a recent attempt to revive the store, and I hope, for 
the sake of my community, it proves successful.
  Despite their small relative size and market share, historic country 
stores have demonstrated incredible resiliency, surviving floods and 
fires, overcoming economic downturns, and reformulating their 
inventories to meet modern needs.
  According to the Vermont Grocers' Association, country stores account 
for an estimated $55 million annually in retail sales in Vermont.
  Nonetheless, competition from larger chain stores continues to 
increase.
  When coupled with the additional cost and expertise required to 
maintain their aging structures and external facades, today's remaining 
country stores are hard-pressed to overcome these unprecedented 
challenges.
  In Vermont, a handful of historic country stores close each year and 
the cumulative impact of those losses is experienced throughout the 
State.
  The National Trust for Historic Preservation has listed the entire 
State of Vermont among America's ``Eleven Most Endangered Places,''
  That is due to the threat that large-scale development poses to 
Vermont's small, independent retailers.
  Yet country stores remain fixtures of Vermont's landscape. The 
Vermont Alliance of Independent Country Stores estimates that more than 
115 historic country stores are scattered about the State.
  Across the country, thousands of these establishments help to define 
the character of rural life.
  These country stores draw local customers and tourists alike, 
offering convenient access to newspapers, groceries and local specialty 
foods in a typically neighborly atmosphere.
  Many stores also double as local post offices or outdoor camping and 
home hardware goods suppliers. It is not unusual, and highly 
recommended, that customers buy a fresh whole wedge of cheddar cheese 
from a 38-pound wheel next to the cash register.
  Fathers can buy earthworms and tackle and take their daughters to the 
nearby fishing hole for an afternoon excursion.
  The National Historic Country Store Preservation Act of 2005 is 
designed to build upon the momentum that country store preservation 
work has generated in Vermont and to gather useful models and 
information to develop a program that supports historic, rural country 
stores nationwide.
  My legislation authorizes the U.S. Economic Development 
Administration to make grants to national, State and local agencies and 
non-profit organizations to support historic country store preservation 
efforts.
  The bill promotes the study of best practices for preserving 
structures, improving profitability and promoting collaboration among 
country store proprietors.
  In addition, the bill establishes a revolving loan fund. The fund 
will be used for research and restoration work.
  It will be used to improve our understanding of existing needs and 
provide the assistance required to address them.
  This bill seeks to sustain America's rural heritage by uniting small 
business development and historic preservation.
  I encourage my colleagues to join me in my efforts to protect our 
Nation's historic country stores and revitalize our rural communities.
  I ask unanimous consent that a summary of the legislation be printed 
in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1011

       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 ``National Historic Country 
     Store Preservation Act of 2005''.

     SEC. 2. FINDINGS.

       Congress finds that--
       (1) historic country stores are lasting icons of rural 
     tradition in the United States;
       (2) historic country stores are valuable contributors to 
     the civic and economic vitality of their local communities;
       (3) historic country stores demonstrate innovative 
     approaches to historic preservation and small business 
     practices;
       (4) historic country stores are threatened by larger 
     competitors and the costs associated with maintaining older 
     structures; and
       (5) the United States should--
       (A) collect and disseminate information concerning the 
     number, condition, and variety of historic country stores;
       (B) develop opportunities for cooperation among proprietors 
     of historic country stores; and
       (C) promote the long-term economic viability of historic 
     country stores.

     SEC. 3. DEFINITIONS.

       In this Act:
       (1) Country store.--
       (A) In general.--The term ``country store'' means a 
     structure independently owned and formerly or currently 
     operated as a business that--
       (i) sells or sold grocery items and other small retail 
     goods; and
       (ii) is located in a nonmetropolitan area, as defined by 
     the Secretary.
       (B) Inclusion.--The term ``country store'' includes a 
     cooperative.
       (2) Eligible applicant.--The term ``eligible applicant'' 
     means--
       (A) a State department of commerce or economic development;
       (B) a national or State nonprofit organization that--
       (i) is described in section 501(c)(3), and exempt from 
     Federal tax under section 501(a), of the Internal Revenue 
     Code of 1986; and
       (ii) has experience or expertise, as determined by the 
     Secretary, in the identification, evaluation, rehabilitation, 
     or preservation of historic country stores;
       (C) a national or State nonprofit trade organization that--
       (i) is described in section 501(c)(3), and exempt from 
     Federal tax under section 501(a), of the Internal Revenue 
     Code of 1986; and
       (ii) acts as a cooperative to promote and enhance country 
     stores; and
       (D) a State historic preservation office.
       (3) Fund.--The term ``Fund'' means the Historic Country 
     Store Revolving Loan Fund established by section 5(a).
       (4) Historic country store.--The term ``historic country 
     store'' means a country store that--
       (A) has operated at the same location for at least 50 
     years; and
       (B) retains sufficient integrity of design, materials, and 
     construction to clearly identify the structure as a country 
     store.
       (5) Secretary.--The term ``Secretary'' means the Secretary 
     of Commerce, acting through the Assistant Secretary for 
     Economic Development.

     SEC. 4. HISTORIC COUNTRY STORE PRESERVATION PROGRAM.

       (a) Establishment.--The Secretary shall establish a 
     historic country store preservation program--
       (1) to collect and disseminate information on historic 
     country stores;
       (2) to promote State and regional partnerships among 
     proprietors of historic country stores; and
       (3) to sponsor and conduct research on--
       (A) the economic impact of historic country stores;
       (B) best practices to--
       (i) improve the profitability of historic country stores; 
     and
       (ii) protect historic country stores from foreclosure or 
     seizure; and
       (C) best practices for developing cooperative organizations 
     that address the economic and historic preservation needs of 
     historic country stores.
       (b) Grants.--
       (1) In general.--The Secretary may make grants to, or enter 
     into contracts or cooperative agreements with, eligible 
     applicants to

[[Page 9513]]

     carry out an eligible project under paragraph (2).
       (2) Eligible projects.--A grant under this subsection may 
     be made to an eligible entity for a project--
       (A) to rehabilitate or repair a historic country store;
       (B) to identify, document, and conduct research on historic 
     country stores; and
       (C) to develop and evaluate appropriate techniques or best 
     practices for protecting historic country stores.
       (3) Requirements.--An eligible applicant that receives a 
     grant for an eligible project under paragraph (1) shall 
     comply with all applicable requirements for historic 
     preservation projects under Federal, State, and local law.
       (c) Country Store Alliance Pilot Project.--The Secretary 
     shall carry out a pilot project in the State of Vermont under 
     which the Secretary shall conduct demonstration activities to 
     preserve historic country stores, including--
       (1) the collection and dissemination of information on 
     historic country stores in the State;
       (2) the development of collaborative country store 
     marketing and purchasing techniques; and
       (3) the development of best practices for historic country 
     store proprietors and communities facing transitions involved 
     in the sale or closure of a historic country store.

     SEC. 5. HISTORIC COUNTRY STORE REVOLVING LOAN FUND.

       (a) Establishment.--There is established in the Treasury of 
     the United States a revolving fund, to be known as the 
     ``Historic Country Store Revolving Loan Fund'', consisting 
     of--
       (1) such amounts as are appropriated to the Fund under 
     subsection (b);
       (2) \1/3\ of the amounts appropriated under section 7(a); 
     and
       (3) any interest earned on investment of amounts in the 
     Fund under subsection (d).
       (b) Transfers to Fund.--There are appropriated to the Fund 
     amounts equivalent to--
       (1) the amounts repaid on loans under section 6; and
       (2) the amounts of the proceeds from the sales of notes, 
     bonds, obligations, liens, mortgages and property delivered 
     or assigned to the Secretary pursuant to loans made under 
     section 6.
       (c) Expenditures From Fund.--
       (1) In general.--Subject to paragraph (2), on request by 
     the Secretary, the Secretary of the Treasury shall transfer 
     from the Fund to the Secretary such amounts as the Secretary 
     determines are necessary to provide loans under section 6.
       (2) Administrative expenses.--An amount not exceeding 10 
     percent of the amounts in the Fund shall be available for 
     each fiscal year to pay the administrative expenses necessary 
     to carry out this Act.
       (d) Investment of Amounts.--
       (1) In general.--The Secretary of the Treasury shall invest 
     such portion of the Fund as is not, in the judgment of the 
     Secretary of the Treasury, required to meet current 
     withdrawals.
       (2) Interest-bearing obligations.--Investments may be made 
     only in interest-bearing obligations of the United States.
       (3) Acquisition of obligations.--For the purpose of 
     investments under paragraph (1), obligations may be 
     acquired--
       (A) on original issue at the issue price; or
       (B) by purchase of outstanding obligations at the market 
     price.
       (4) Sale of obligations.--Any obligation acquired by the 
     Fund may be sold by the Secretary of the Treasury at the 
     market price.
       (5) Credits to fund.--The interest on, and the proceeds 
     from the sale or redemption of, any obligations held in the 
     Fund shall be credited to and form a part of the Fund.
       (e) Transfers of Amounts.--
       (1) In general.--The amounts required to be transferred to 
     the Fund under this section shall be transferred at least 
     monthly from the general fund of the Treasury to the Fund on 
     the basis of estimates made by the Secretary of the Treasury.
       (2) Adjustments.--Proper adjustment shall be made in 
     amounts subsequently transferred to the extent prior 
     estimates were in excess of or less than the amounts required 
     to be transferred.

     SEC. 6. LOANS FOR HISTORIC COUNTRY STORE REHABILITATION OR 
                   REPAIR PROJECTS.

       (a) In General.--Using amounts in the Fund, the Secretary 
     may make loans to historic country store proprietors and 
     eligible applicants for projects to purchase, rehabilitate, 
     or repair historic country stores.
       (b) Applications.--
       (1) In general.--To be eligible for a loan under this 
     section, a country store proprietor or eligible applicant 
     shall submit to the Secretary an application for a loan.
       (2) Considerations for approval or disapproval.--In 
     determining whether to approve or disapprove an application 
     for a loan submitted under paragraph (1), the Secretary shall 
     consider--
       (A) the demonstrated need for the purchase, construction, 
     reconstruction, or renovation of the historic country store 
     based on the condition of the historic country store;
       (B) the age of the historic country store; and
       (C) the extent to which the project to purchase, 
     rehabilitate, or repair the historic country store includes 
     collaboration among historic country store proprietors and 
     other eligible applicants.
       (c) Requirements.--An eligible applicant that receives a 
     loan for a project under this section shall comply with all 
     applicable standards for historic preservation projects under 
     Federal, State, and local law.

     SEC. 7. AUTHORIZATION OF APPROPRIATIONS.

       (a) In General.--There is authorized to be appropriated to 
     carry out this Act, $50,000,000 for the period of fiscal 
     years 2006 through 2011, to remain available until expended.
       (b) Country Store Alliance Pilot Project.--Of the amount 
     made available under subsection (a), not less than $250,000 
     shall be made available to carry out section 4(c).

                   Senator James M. Jeffords Summary


 national historic country store preservation act of 2005--may 12, 2005

       The National Historic Country Store Preservation Act of 
     2005 authorizes the Secretary of the Economic Development 
     Administration to establish a National Historic Country Store 
     Preservation Program. This program will sponsor and conduct 
     research on the economic impact of historic country stores 
     and on best practices for improving profitability and 
     addressing their historic preservation and small business 
     development needs. The National Historic Country Store 
     Preservation Program will offer small grants and revolving 
     loans to State and local agencies, non-profit organizations, 
     and historic country store proprietors for the purpose of 
     historic country store preservation projects. In addition, 
     the bill authorizes a Country Store Alliance Pilot Project to 
     be conducted in Vermont. The bill authorizes $50 million to 
     be appropriated for the period of fiscal years 2006 through 
     2010.
                                 ______
                                 
      By Mr. KENNEDY (for himself, Mr. Harkin, Ms. Mikulski, Mrs. 
        Murray, Mr. Reed, Mr. Levin, Mr. Lautenberg, Mrs. Boxer, Mr. 
        Dorgan, Mr. Schumer, Ms. Cantwell, Mr. Corzine, Mr. Dayton, and 
        Ms. Stabenow):
  S. 1012. A bill to amend the Public Health Service Act, the Employee 
Retirement Income Security Act of 1974, and the Internal Revenue Code 
of 1986 to protect consumers in managed care plans and other health 
coverage; to the Committee on Finance.
  Mr. KENNEDY. Mr. President, it is time for a new effort in Congress 
to enact the Patients' Bill of Rights. The Senate has approved major 
bipartisan legislation to end the abuses of managed care and HMOs 
before, but final enactment of this important measure was blocked by 
the HMOs and the vested interests of the corporate world that deny 
working Americans their basic rights and a needed voice in challenging 
decisions that deny them basic medical care. It was blocked too by an 
administration that professes to support patients' rights, but does all 
it can to block legislation to guarantee those rights.
  Despite our outstanding researchers and professionals, families 
across the country are overwhelmingly and justifiably concerned that 
medical decisions are too often made by insurance industry accountants, 
and not their doctors. HMO profits too often take priority over patient 
needs. It is time for Congress to end the abuses of patients and 
physicians by HMOs and the insurance industry. Too often, managed care 
is mismanaged care. No amount of distortions or smokescreens by 
insurance companies can change the facts.
  The Patients' Bill of Rights can stop these abuses. For millions of 
Americans who rely on health insurance to protect them when serious 
illness strikes, the Patients' Bill of Rights is literally a matter of 
life and death.
  It's important to remember what this debate is really about. It's not 
about lawyers. It's not about insurance companies. It's about 
patients--mothers and daughters, fathers and sons, sisters and 
brothers. It's about families around the country who will someday face 
the challenge of serious illness and deserve the best in health care--
the same care that all members of the Senate want for ourselves and our 
loved ones. But too many families are denied the care they need and 
deserve because of abuses by HMOs and other insurance companies.
  The legislation we are introducing today will end those abuses. 
Several of its provisions are especially important--specialty care, 
clinical trials, and prescription drugs.

[[Page 9514]]

  In each of these areas, care is too often delayed or denied by 
insurance companies more interested in profits than patients. Access to 
specialty care for serious and complex illnesses is a critical element 
of good health care. Yet denial of needed specialists is one of the 
most common abuses in the current system.
  Patients with cancer and other serious illnesses need specialty care. 
Often, their best hope for a cure or for precious extra years of life 
is participation in a clinical trial. But too often, both are lacking. 
Patients with cancer or other serious illnesses and their physicians 
must fight HMOs to take advantage of this opportunity.
  Traditionally, insurance companies have paid for the routine costs of 
doctors and hospitals in clinical trials. But HMOs frequently refuse to 
do so, with devastating effects on patients and research alike. Our 
legislation will end this abuse.
  Another abuse that will be ended by our plan is the denial of 
medically necessary drugs not on an HMO plan's list. One group that 
suffers from this denial is the mentally ill. Some of the most dramatic 
advances in medicine in recent years have been the development of 
effective drugs to treat persons with serious mental illness. Too 
often, however, they're told to settle for older, cheaper, less 
effective drugs with harmful side effects, because an HMO refuses to 
pay for the best standard of care.
  Our legislation guarantees that patients can get medically necessary 
drugs, even if they are not on the HMO's list. Equally important, our 
bill guarantees that these drugs will be provided at a cost no greater 
than the normal cost-sharing for other medications. Access to needed 
drugs is a concern for every family, particularly when new cures are 
increasingly based on new drugs today.
  The list of abuses goes on and on. People across the country know 
these abuses are wrong. Managed care practices that cause these 
tragedies cost lives, and ending these abuses is a matter of simple 
justice and common decency.
  The Patients' Bill of Rights will protect families from insurance 
company bureaucracies that rob them of their peace of mind, their 
health, or even their lives. The bill is a guarantee that medical 
decisions will be made by doctors and patients, not managed care 
accountants. It is actively supported by doctors, nurses, patients, 
small businesses, religious organizations, and working families. The 
support is impressive in its breadth, its depth and its diversity.
  It is time to guarantee these basic rights for patients. It is time 
for Congress to pass this bill. Every doctor knows it. Every nurse 
knows it. Every patient knows it. And every Senator knows it too.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1012

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

Sec. 1. Short title; table of contents.

                    TITLE I--IMPROVING MANAGED CARE

   Subtitle A--Utilization Review; Claims; and Internal and External 
                                Appeals

Sec. 101. Utilization review activities.
Sec. 102. Procedures for initial claims for benefits and prior 
              authorization determinations.
Sec. 103. Internal appeals of claims denials.
Sec. 104. Independent external appeals procedures.
Sec. 105. Health Care Consumer Assistance Fund.

                       Subtitle B--Access to Care

Sec. 111. Consumer choice option.
Sec. 112. Choice of health care professional.
Sec. 113. Access to emergency care.
Sec. 114. Timely access to specialists.
Sec. 115. Patient access to obstetrical and gynecological care.
Sec. 116. Access to pediatric care.
Sec. 117. Continuity of care.
Sec. 118. Access to needed prescription drugs.
Sec. 119. Coverage for individuals participating in approved clinical 
              trials.
Sec. 120. Required coverage for minimum hospital stay for mastectomies 
              and lymph node dissections for the treatment of breast 
              cancer and coverage for secondary consultations.

                   Subtitle C--Access to Information

Sec. 121. Patient access to information.

         Subtitle D--Protecting the Doctor-Patient Relationship

Sec. 131. Prohibition of interference with certain medical 
              communications.
Sec. 132. Prohibition of discrimination against providers based on 
              licensure.
Sec. 133. Prohibition against improper incentive arrangements.
Sec. 134. Payment of claims.
Sec. 135. Protection for patient advocacy.

                        Subtitle E--Definitions

Sec. 151. Definitions.
Sec. 152. Preemption; State flexibility; construction.
Sec. 153. Exclusions.
Sec. 154. Treatment of excepted benefits.
Sec. 155. Regulations.
Sec. 156. Incorporation into plan or coverage documents.
Sec. 157. Preservation of protections.

 TITLE II--APPLICATION OF QUALITY CARE STANDARDS TO GROUP HEALTH PLANS 
   AND HEALTH INSURANCE COVERAGE UNDER THE PUBLIC HEALTH SERVICE ACT

Sec. 201. Application to group health plans and group health insurance 
              coverage.
Sec. 202. Application to individual health insurance coverage.
Sec. 203. Cooperation between Federal and State authorities.

   TITLE III--APPLICATION OF PATIENT PROTECTION STANDARDS TO FEDERAL 
                       HEALTH INSURANCE PROGRAMS

Sec. 301. Application of patient protection standards to Federal health 
              insurance programs.

TITLE IV--AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
                                  1974

Sec. 401. Application of patient protection standards to group health 
              plans and group health insurance coverage under the 
              Employee Retirement Income Security Act of 1974.
Sec. 402. Availability of civil remedies.
Sec. 403. Cooperation between Federal and State authorities.

        TITLE V--AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986

        Subtitle A--Application of Patient Protection Provisions

Sec. 501. Application to group health plans under the Internal Revenue 
              Code of 1986.
Sec. 502. Conforming enforcement for women's health and cancer rights.

         Subtitle B--Health Care Coverage Access Tax Incentives

Sec. 511. Credit for health insurance expenses of small businesses.
Sec. 512. Certain grants by private foundations to qualified health 
              benefit purchasing coalitions.
Sec. 513. State grant program for market innovation.
Sec. 514. Grant program to facilitate health benefits information for 
              small employers.
Sec. 515. State grant program for market innovation.

       TITLE VI--EFFECTIVE DATES; COORDINATION IN IMPLEMENTATION

Sec. 601. Effective dates.
Sec. 602. Coordination in implementation.
Sec. 603. Severability.

                  TITLE VII--MISCELLANEOUS PROVISIONS

Sec. 701. No impact on Social Security Trust Fund.

                    TITLE I--IMPROVING MANAGED CARE

   Subtitle A--Utilization Review; Claims; and Internal and External 
                                Appeals

     SEC. 101. UTILIZATION REVIEW ACTIVITIES.

       (a) Compliance With Requirements.--
       (1) In general.--A group health plan, and a health 
     insurance issuer that provides health insurance coverage, 
     shall conduct utilization review activities in connection 
     with the provision of benefits under such plan or coverage 
     only in accordance with a utilization review program that 
     meets the requirements of this section and section 102.
       (2) Use of outside agents.--Nothing in this section shall 
     be construed as preventing a group health plan or health 
     insurance issuer from arranging through a contract or 
     otherwise for persons or entities to conduct utilization 
     review activities on behalf of the plan or issuer, so long as 
     such activities are conducted in accordance with a 
     utilization review program that meets the requirements of 
     this section.
       (3) Utilization review defined.--For purposes of this 
     section, the terms ``utilization review'' and ``utilization 
     review activities''

[[Page 9515]]

     mean procedures used to monitor or evaluate the use or 
     coverage, clinical necessity, appropriateness, efficacy, or 
     efficiency of health care services, procedures or settings, 
     and includes prospective review, concurrent review, second 
     opinions, case management, discharge planning, or 
     retrospective review.
       (b) Written Policies and Criteria.--
       (1) Written policies.--A utilization review program shall 
     be conducted consistent with written policies and procedures 
     that govern all aspects of the program.
       (2) Use of written criteria.--
       (A) In general.--Such a program shall utilize written 
     clinical review criteria developed with input from a range of 
     appropriate actively practicing health care professionals, as 
     determined by the plan, pursuant to the program. Such 
     criteria shall include written clinical review criteria that 
     are based on valid clinical evidence where available and that 
     are directed specifically at meeting the needs of at-risk 
     populations and covered individuals with chronic conditions 
     or severe illnesses, including gender-specific criteria and 
     pediatric-specific criteria where available and appropriate.
       (B) Continuing use of standards in retrospective review.--
     If a health care service has been specifically pre-authorized 
     or approved for a participant, beneficiary, or enrollee under 
     such a program, the program shall not, pursuant to 
     retrospective review, revise or modify the specific 
     standards, criteria, or procedures used for the utilization 
     review for procedures, treatment, and services delivered to 
     the enrollee during the same course of treatment.
       (C) Review of sample of claims denials.--Such a program 
     shall provide for a periodic evaluation of the clinical 
     appropriateness of at least a sample of denials of claims for 
     benefits.
       (c) Conduct of Program Activities.--
       (1) Administration by health care professionals.--A 
     utilization review program shall be administered by qualified 
     health care professionals who shall oversee review decisions.
       (2) Use of qualified, independent personnel.--
       (A) In general.--A utilization review program shall provide 
     for the conduct of utilization review activities only through 
     personnel who are qualified and have received appropriate 
     training in the conduct of such activities under the program.
       (B) Prohibition of contingent compensation arrangements.--
     Such a program shall not, with respect to utilization review 
     activities, permit or provide compensation or anything of 
     value to its employees, agents, or contractors in a manner 
     that encourages denials of claims for benefits.
       (C) Prohibition of conflicts.--Such a program shall not 
     permit a health care professional who is providing health 
     care services to an individual to perform utilization review 
     activities in connection with the health care services being 
     provided to the individual.
       (3) Accessibility of review.--Such a program shall provide 
     that appropriate personnel performing utilization review 
     activities under the program, including the utilization 
     review administrator, are reasonably accessible by toll-free 
     telephone during normal business hours to discuss patient 
     care and allow response to telephone requests, and that 
     appropriate provision is made to receive and respond promptly 
     to calls received during other hours.
       (4) Limits on frequency.--Such a program shall not provide 
     for the performance of utilization review activities with 
     respect to a class of services furnished to an individual 
     more frequently than is reasonably required to assess whether 
     the services under review are medically necessary and 
     appropriate.

     SEC. 102. PROCEDURES FOR INITIAL CLAIMS FOR BENEFITS AND 
                   PRIOR AUTHORIZATION DETERMINATIONS.

       (a) Procedures of Initial Claims for Benefits.--
       (1) In general.--A group health plan, and a health 
     insurance issuer offering health insurance coverage, shall--
       (A) make a determination on an initial claim for benefits 
     by a participant, beneficiary, or enrollee (or authorized 
     representative) regarding payment or coverage for items or 
     services under the terms and conditions of the plan or 
     coverage involved, including any cost-sharing amount that the 
     participant, beneficiary, or enrollee is required to pay with 
     respect to such claim for benefits; and
       (B) notify a participant, beneficiary, or enrollee (or 
     authorized representative) and the treating health care 
     professional involved regarding a determination on an initial 
     claim for benefits made under the terms and conditions of the 
     plan or coverage, including any cost-sharing amounts that the 
     participant, beneficiary, or enrollee may be required to make 
     with respect to such claim for benefits, and of the right of 
     the participant, beneficiary, or enrollee to an internal 
     appeal under section 103.
       (2) Access to information.--
       (A) Timely provision of necessary information.--With 
     respect to an initial claim for benefits, the participant, 
     beneficiary, or enrollee (or authorized representative) and 
     the treating health care professional (if any) shall provide 
     the plan or issuer with access to information requested by 
     the plan or issuer that is necessary to make a determination 
     relating to the claim. Such access shall be provided not 
     later than 5 days after the date on which the request for 
     information is received, or, in a case described in 
     subparagraph (B) or (C) of subsection (b)(1), by such earlier 
     time as may be necessary to comply with the applicable 
     timeline under such subparagraph.
       (B) Limited effect of failure on plan or issuer's 
     obligations.--Failure of the participant, beneficiary, or 
     enrollee to comply with the requirements of subparagraph (A) 
     shall not remove the obligation of the plan or issuer to make 
     a decision in accordance with the medical exigencies of the 
     case and as soon as possible, based on the available 
     information, and failure to comply with the time limit 
     established by this paragraph shall not remove the obligation 
     of the plan or issuer to comply with the requirements of this 
     section.
       (3) Oral requests.--In the case of a claim for benefits 
     involving an expedited or concurrent determination, a 
     participant, beneficiary, or enrollee (or authorized 
     representative) may make an initial claim for benefits 
     orally, but a group health plan, or health insurance issuer 
     offering health insurance coverage, may require that the 
     participant, beneficiary, or enrollee (or authorized 
     representative) provide written confirmation of such request 
     in a timely manner on a form provided by the plan or issuer. 
     In the case of such an oral request for benefits, the making 
     of the request (and the timing of such request) shall be 
     treated as the making at that time of a claim for such 
     benefits without regard to whether and when a written 
     confirmation of such request is made.
       (b) Timeline for Making Determinations.--
       (1) Prior authorization determination.--
       (A) In general.--A group health plan, and a health 
     insurance issuer offering health insurance coverage, shall 
     make a prior authorization determination on a claim for 
     benefits (whether oral or written) in accordance with the 
     medical exigencies of the case and as soon as possible, but 
     in no case later than 14 days from the date on which the plan 
     or issuer receives information that is reasonably necessary 
     to enable the plan or issuer to make a determination on the 
     request for prior authorization and in no case later than 28 
     days after the date of the claim for benefits is received.
       (B) Expedited determination.--Notwithstanding subparagraph 
     (A), a group health plan, and a health insurance issuer 
     offering health insurance coverage, shall expedite a prior 
     authorization determination on a claim for benefits described 
     in such subparagraph when a request for such an expedited 
     determination is made by a participant, beneficiary, or 
     enrollee (or authorized representative) at any time during 
     the process for making a determination and a health care 
     professional certifies, with the request, that a 
     determination under the procedures described in subparagraph 
     (A) would seriously jeopardize the life or health of the 
     participant, beneficiary, or enrollee or the ability of the 
     participant, beneficiary, or enrollee to maintain or regain 
     maximum function. Such determination shall be made in 
     accordance with the medical exigencies of the case and as 
     soon as possible, but in no case later than 72 hours after 
     the time the request is received by the plan or issuer under 
     this subparagraph.
       (C) Ongoing care.--
       (i) Concurrent review.--

       (I) In general.--Subject to clause (ii), in the case of a 
     concurrent review of ongoing care (including 
     hospitalization), which results in a termination or reduction 
     of such care, the plan or issuer must provide by telephone 
     and in printed form notice of the concurrent review 
     determination to the individual or the individual's designee 
     and the individual's health care provider in accordance with 
     the medical exigencies of the case and as soon as possible, 
     with sufficient time prior to the termination or reduction to 
     allow for an appeal under section 103(b)(3) to be completed 
     before the termination or reduction takes effect.
       (II) Contents of notice.--Such notice shall include, with 
     respect to ongoing health care items and services, the number 
     of ongoing services approved, the new total of approved 
     services, the date of onset of services, and the next review 
     date, if any, as well as a statement of the individual's 
     rights to further appeal.

       (ii) Rule of construction.--Clause (i) shall not be 
     construed as requiring plans or issuers to provide coverage 
     of care that would exceed the coverage limitations for such 
     care.
       (2) Retrospective determination.--A group health plan, and 
     a health insurance issuer offering health insurance coverage, 
     shall make a retrospective determination on a claim for 
     benefits in accordance with the medical exigencies of the 
     case and as soon as possible, but not later than 30 days 
     after the date on which the plan or issuer receives 
     information that is reasonably necessary to enable the plan 
     or issuer to make a determination on the claim, or, if 
     earlier, 60 days after the date of receipt of the claim for 
     benefits.
       (c) Notice of a Denial of a Claim for Benefits.--Written 
     notice of a denial made

[[Page 9516]]

     under an initial claim for benefits shall be issued to the 
     participant, beneficiary, or enrollee (or authorized 
     representative) and the treating health care professional in 
     accordance with the medical exigencies of the case and as 
     soon as possible, but in no case later than 2 days after the 
     date of the determination (or, in the case described in 
     subparagraph (B) or (C) of subsection (b)(1), within the 72-
     hour or applicable period referred to in such subparagraph).
       (d) Requirements of Notice of Determinations.--The written 
     notice of a denial of a claim for benefits determination 
     under subsection (c) shall be provided in printed form and 
     written in a manner calculated to be understood by the 
     participant, beneficiary, or enrollee and shall include--
       (1) the specific reasons for the determination (including a 
     summary of the clinical or scientific evidence used in making 
     the determination);
       (2) the procedures for obtaining additional information 
     concerning the determination; and
       (3) notification of the right to appeal the determination 
     and instructions on how to initiate an appeal in accordance 
     with section 103.
       (e) Definitions.--For purposes of this part:
       (1) Authorized representative.--The term ``authorized 
     representative'' means, with respect to an individual who is 
     a participant, beneficiary, or enrollee, any health care 
     professional or other person acting on behalf of the 
     individual with the individual's consent or without such 
     consent if the individual is medically unable to provide such 
     consent.
       (2) Claim for benefits.--The term ``claim for benefits'' 
     means any request for coverage (including authorization of 
     coverage), for eligibility, or for payment in whole or in 
     part, for an item or service under a group health plan or 
     health insurance coverage.
       (3) Denial of claim for benefits.--The term ``denial'' 
     means, with respect to a claim for benefits, a denial (in 
     whole or in part) of, or a failure to act on a timely basis 
     upon, the claim for benefits and includes a failure to 
     provide benefits (including items and services) required to 
     be provided under this title.
       (4) Treating health care professional.--The term ``treating 
     health care professional'' means, with respect to services to 
     be provided to a participant, beneficiary, or enrollee, a 
     health care professional who is primarily responsible for 
     delivering those services to the participant, beneficiary, or 
     enrollee.

     SEC. 103. INTERNAL APPEALS OF CLAIMS DENIALS.

       (a) Right to Internal Appeal.--
       (1) In general.--A participant, beneficiary, or enrollee 
     (or authorized representative) may appeal any denial of a 
     claim for benefits under section 102 under the procedures 
     described in this section.
       (2) Time for appeal.--
       (A) In general.--A group health plan, and a health 
     insurance issuer offering health insurance coverage, shall 
     ensure that a participant, beneficiary, or enrollee (or 
     authorized representative) has a period of not less than 180 
     days beginning on the date of a denial of a claim for 
     benefits under section 102 in which to appeal such denial 
     under this section.
       (B) Date of denial.--For purposes of subparagraph (A), the 
     date of the denial shall be deemed to be the date as of which 
     the participant, beneficiary, or enrollee knew of the denial 
     of the claim for benefits.
       (3) Failure to act.--The failure of a plan or issuer to 
     issue a determination on a claim for benefits under section 
     102 within the applicable timeline established for such a 
     determination under such section is a denial of a claim for 
     benefits for purposes this subtitle as of the date of the 
     applicable deadline.
       (4) Plan waiver of internal review.--A group health plan, 
     or health insurance issuer offering health insurance 
     coverage, may waive the internal review process under this 
     section. In such case the plan or issuer shall provide notice 
     to the participant, beneficiary, or enrollee (or authorized 
     representative) involved, the participant, beneficiary, or 
     enrollee (or authorized representative) involved shall be 
     relieved of any obligation to complete the internal review 
     involved, and may, at the option of such participant, 
     beneficiary, enrollee, or representative proceed directly to 
     seek further appeal through external review under section 104 
     or otherwise.
       (b) Timelines for Making Determinations.--
       (1) Oral requests.--In the case of an appeal of a denial of 
     a claim for benefits under this section that involves an 
     expedited or concurrent determination, a participant, 
     beneficiary, or enrollee (or authorized representative) may 
     request such appeal orally. A group health plan, or health 
     insurance issuer offering health insurance coverage, may 
     require that the participant, beneficiary, or enrollee (or 
     authorized representative) provide written confirmation of 
     such request in a timely manner on a form provided by the 
     plan or issuer. In the case of such an oral request for an 
     appeal of a denial, the making of the request (and the timing 
     of such request) shall be treated as the making at that time 
     of a request for an appeal without regard to whether and when 
     a written confirmation of such request is made.
       (2) Access to information.--
       (A) Timely provision of necessary information.--With 
     respect to an appeal of a denial of a claim for benefits, the 
     participant, beneficiary, or enrollee (or authorized 
     representative) and the treating health care professional (if 
     any) shall provide the plan or issuer with access to 
     information requested by the plan or issuer that is necessary 
     to make a determination relating to the appeal. Such access 
     shall be provided not later than 5 days after the date on 
     which the request for information is received, or, in a case 
     described in subparagraph (B) or (C) of paragraph (3), by 
     such earlier time as may be necessary to comply with the 
     applicable timeline under such subparagraph.
       (B) Limited effect of failure on plan or issuer's 
     obligations.--Failure of the participant, beneficiary, or 
     enrollee to comply with the requirements of subparagraph (A) 
     shall not remove the obligation of the plan or issuer to make 
     a decision in accordance with the medical exigencies of the 
     case and as soon as possible, based on the available 
     information, and failure to comply with the time limit 
     established by this paragraph shall not remove the obligation 
     of the plan or issuer to comply with the requirements of this 
     section.
       (3) Prior authorization determinations.--
       (A) In general.--Except as provided in this paragraph or 
     paragraph (4), a group health plan, and a health insurance 
     issuer offering health insurance coverage, shall make a 
     determination on an appeal of a denial of a claim for 
     benefits under this subsection in accordance with the medical 
     exigencies of the case and as soon as possible, but in no 
     case later than 14 days from the date on which the plan or 
     issuer receives information that is reasonably necessary to 
     enable the plan or issuer to make a determination on the 
     appeal and in no case later than 28 days after the date the 
     request for the appeal is received.
       (B) Expedited determination.--Notwithstanding subparagraph 
     (A), a group health plan, and a health insurance issuer 
     offering health insurance coverage, shall expedite a prior 
     authorization determination on an appeal of a denial of a 
     claim for benefits described in subparagraph (A), when a 
     request for such an expedited determination is made by a 
     participant, beneficiary, or enrollee (or authorized 
     representative) at any time during the process for making a 
     determination and a health care professional certifies, with 
     the request, that a determination under the procedures 
     described in subparagraph (A) would seriously jeopardize the 
     life or health of the participant, beneficiary, or enrollee 
     or the ability of the participant, beneficiary, or enrollee 
     to maintain or regain maximum function. Such determination 
     shall be made in accordance with the medical exigencies of 
     the case and as soon as possible, but in no case later than 
     72 hours after the time the request for such appeal is 
     received by the plan or issuer under this subparagraph.
       (C) Ongoing care determinations.--
       (i) In general.--Subject to clause (ii), in the case of a 
     concurrent review determination described in section 
     102(b)(1)(C)(i)(I), which results in a termination or 
     reduction of such care, the plan or issuer must provide 
     notice of the determination on the appeal under this section 
     by telephone and in printed form to the individual or the 
     individual's designee and the individual's health care 
     provider in accordance with the medical exigencies of the 
     case and as soon as possible, with sufficient time prior to 
     the termination or reduction to allow for an external appeal 
     under section 104 to be completed before the termination or 
     reduction takes effect.
       (ii) Rule of construction.--Clause (i) shall not be 
     construed as requiring plans or issuers to provide coverage 
     of care that would exceed the coverage limitations for such 
     care.
       (4) Retrospective determination.--A group health plan, and 
     a health insurance issuer offering health insurance coverage, 
     shall make a retrospective determination on an appeal of a 
     denial of a claim for benefits in no case later than 30 days 
     after the date on which the plan or issuer receives necessary 
     information that is reasonably necessary to enable the plan 
     or issuer to make a determination on the appeal and in no 
     case later than 60 days after the date the request for the 
     appeal is received.
       (c) Conduct of Review.--
       (1) In general.--A review of a denial of a claim for 
     benefits under this section shall be conducted by an 
     individual with appropriate expertise who was not involved in 
     the initial determination.
       (2) Peer review of medical decisions by health care 
     professionals.--A review of an appeal of a denial of a claim 
     for benefits that is based on a lack of medical necessity and 
     appropriateness, or based on an experimental or 
     investigational treatment, or requires an evaluation of 
     medical facts--
       (A) shall be made by a physician (allopathic or 
     osteopathic); or
       (B) in a claim for benefits provided by a non-physician 
     health professional, shall be made by reviewer (or reviewers) 
     including at least one practicing non-physician health 
     professional of the same or similar specialty;


[[Page 9517]]


     with appropriate expertise (including, in the case of a 
     child, appropriate pediatric expertise) and acting within the 
     appropriate scope of practice within the State in which the 
     service is provided or rendered, who was not involved in the 
     initial determination.
       (d) Notice of Determination.--
       (1) In general.--Written notice of a determination made 
     under an internal appeal of a denial of a claim for benefits 
     shall be issued to the participant, beneficiary, or enrollee 
     (or authorized representative) and the treating health care 
     professional in accordance with the medical exigencies of the 
     case and as soon as possible, but in no case later than 2 
     days after the date of completion of the review (or, in the 
     case described in subparagraph (B) or (C) of subsection 
     (b)(3), within the 72-hour or applicable period referred to 
     in such subparagraph).
       (2) Final determination.--The decision by a plan or issuer 
     under this section shall be treated as the final 
     determination of the plan or issuer on a denial of a claim 
     for benefits. The failure of a plan or issuer to issue a 
     determination on an appeal of a denial of a claim for 
     benefits under this section within the applicable timeline 
     established for such a determination shall be treated as a 
     final determination on an appeal of a denial of a claim for 
     benefits for purposes of proceeding to external review under 
     section 104.
       (3) Requirements of notice.--With respect to a 
     determination made under this section, the notice described 
     in paragraph (1) shall be provided in printed form and 
     written in a manner calculated to be understood by the 
     participant, beneficiary, or enrollee and shall include--
       (A) the specific reasons for the determination (including a 
     summary of the clinical or scientific evidence used in making 
     the determination);
       (B) the procedures for obtaining additional information 
     concerning the determination; and
       (C) notification of the right to an independent external 
     review under section 104 and instructions on how to initiate 
     such a review.

     SEC. 104. INDEPENDENT EXTERNAL APPEALS PROCEDURES.

       (a) Right to External Appeal.--A group health plan, and a 
     health insurance issuer offering health insurance coverage, 
     shall provide in accordance with this section participants, 
     beneficiaries, and enrollees (or authorized representatives) 
     with access to an independent external review for any denial 
     of a claim for benefits.
       (b) Initiation of the Independent External Review 
     Process.--
       (1) Time to file.--A request for an independent external 
     review under this section shall be filed with the plan or 
     issuer not later than 180 days after the date on which the 
     participant, beneficiary, or enrollee receives notice of the 
     denial under section 103(d) or notice of waiver of internal 
     review under section 103(a)(4) or the date on which the plan 
     or issuer has failed to make a timely decision under section 
     103(d)(2) and notifies the participant or beneficiary that it 
     has failed to make a timely decision and that the beneficiary 
     must file an appeal with an external review entity within 180 
     days if the participant or beneficiary desires to file such 
     an appeal.
       (2) Filing of request.--
       (A) In general.--Subject to the succeeding provisions of 
     this subsection, a group health plan, or health insurance 
     issuer offering health insurance coverage, may--
       (i) except as provided in subparagraph (B)(i), require that 
     a request for review be in writing;
       (ii) limit the filing of such a request to the participant, 
     beneficiary, or enrollee involved (or an authorized 
     representative);
       (iii) except if waived by the plan or issuer under section 
     103(a)(4), condition access to an independent external review 
     under this section upon a final determination of a denial of 
     a claim for benefits under the internal review procedure 
     under section 103;
       (iv) except as provided in subparagraph (B)(ii), require 
     payment of a filing fee to the plan or issuer of a sum that 
     does not exceed $25; and
       (v) require that a request for review include the consent 
     of the participant, beneficiary, or enrollee (or authorized 
     representative) for the release of necessary medical 
     information or records of the participant, beneficiary, or 
     enrollee to the qualified external review entity only for 
     purposes of conducting external review activities.
       (B) Requirements and exception relating to general rule.--
       (i) Oral requests permitted in expedited or concurrent 
     cases.--In the case of an expedited or concurrent external 
     review as provided for under subsection (e), the request for 
     such review may be made orally. A group health plan, or 
     health insurance issuer offering health insurance coverage, 
     may require that the participant, beneficiary, or enrollee 
     (or authorized representative) provide written confirmation 
     of such request in a timely manner on a form provided by the 
     plan or issuer. Such written confirmation shall be treated as 
     a consent for purposes of subparagraph (A)(v). In the case of 
     such an oral request for such a review, the making of the 
     request (and the timing of such request) shall be treated as 
     the making at that time of a request for such a review 
     without regard to whether and when a written confirmation of 
     such request is made.
       (ii) Exception to filing fee requirement.--

       (I) Indigency.--Payment of a filing fee shall not be 
     required under subparagraph (A)(iv) where there is a 
     certification (in a form and manner specified in guidelines 
     established by the appropriate Secretary) that the 
     participant, beneficiary, or enrollee is indigent (as defined 
     in such guidelines).
       (II) Fee not required.--Payment of a filing fee shall not 
     be required under subparagraph (A)(iv) if the plan or issuer 
     waives the internal appeals process under section 103(a)(4).
       (III) Refunding of fee.--The filing fee paid under 
     subparagraph (A)(iv) shall be refunded if the determination 
     under the independent external review is to reverse or modify 
     the denial which is the subject of the review.
       (IV) Collection of filing fee.--The failure to pay such a 
     filing fee shall not prevent the consideration of a request 
     for review but, subject to the preceding provisions of this 
     clause, shall constitute a legal liability to pay.

       (c) Referral to Qualified External Review Entity Upon 
     Request.--
       (1) In general.--Upon the filing of a request for 
     independent external review with the group health plan, or 
     health insurance issuer offering health insurance coverage, 
     the plan or issuer shall immediately refer such request, and 
     forward the plan or issuer's initial decision (including the 
     information described in section 103(d)(3)(A)), to a 
     qualified external review entity selected in accordance with 
     this section.
       (2) Access to plan or issuer and health professional 
     information.--With respect to an independent external review 
     conducted under this section, the participant, beneficiary, 
     or enrollee (or authorized representative), the plan or 
     issuer, and the treating health care professional (if any) 
     shall provide the external review entity with information 
     that is necessary to conduct a review under this section, as 
     determined and requested by the entity. Such information 
     shall be provided not later than 5 days after the date on 
     which the request for information is received, or, in a case 
     described in clause (ii) or (iii) of subsection (e)(1)(A), by 
     such earlier time as may be necessary to comply with the 
     applicable timeline under such clause.
       (3) Screening of requests by qualified external review 
     entities.--
       (A) In general.--With respect to a request referred to a 
     qualified external review entity under paragraph (1) relating 
     to a denial of a claim for benefits, the entity shall refer 
     such request for the conduct of an independent medical review 
     unless the entity determines that--
       (i) any of the conditions described in clauses (ii) or 
     (iii) of subsection (b)(2)(A) have not been met;
       (ii) the denial of the claim for benefits does not involve 
     a medically reviewable decision under subsection (d)(2);
       (iii) the denial of the claim for benefits relates to a 
     decision regarding whether an individual is a participant, 
     beneficiary, or enrollee who is enrolled under the terms and 
     conditions of the plan or coverage (including the 
     applicability of any waiting period under the plan or 
     coverage); or
       (iv) the denial of the claim for benefits is a decision as 
     to the application of cost-sharing requirements or the 
     application of a specific exclusion or express limitation on 
     the amount, duration, or scope of coverage of items or 
     services under the terms and conditions of the plan or 
     coverage unless the decision is a denial described in 
     subsection (d)(2).

     Upon making a determination that any of clauses (i) through 
     (iv) applies with respect to the request, the entity shall 
     determine that the denial of a claim for benefits involved is 
     not eligible for independent medical review under subsection 
     (d), and shall provide notice in accordance with subparagraph 
     (C).
       (B) Process for making determinations.--
       (i) No deference to prior determinations.--In making 
     determinations under subparagraph (A), there shall be no 
     deference given to determinations made by the plan or issuer 
     or the recommendation of a treating health care professional 
     (if any).
       (ii) Use of appropriate personnel.--A qualified external 
     review entity shall use appropriately qualified personnel to 
     make determinations under this section.
       (C) Notices and general timelines for determination.--
       (i) Notice in case of denial of referral.--If the entity 
     under this paragraph does not make a referral to an 
     independent medical reviewer, the entity shall provide notice 
     to the plan or issuer, the participant, beneficiary, or 
     enrollee (or authorized representative) filing the request, 
     and the treating health care professional (if any) that the 
     denial is not subject to independent medical review. Such 
     notice--

       (I) shall be written (and, in addition, may be provided 
     orally) in a manner calculated to be understood by a 
     participant or enrollee;
       (II) shall include the reasons for the determination;
       (III) include any relevant terms and conditions of the plan 
     or coverage; and

[[Page 9518]]

       (IV) include a description of any further recourse 
     available to the individual.

       (ii) General timeline for determinations.--Upon receipt of 
     information under paragraph (2), the qualified external 
     review entity, and if required the independent medical 
     reviewer, shall make a determination within the overall 
     timeline that is applicable to the case under review as 
     described in subsection (e), except that if the entity 
     determines that a referral to an independent medical reviewer 
     is not required, the entity shall provide notice of such 
     determination to the participant, beneficiary, or enrollee 
     (or authorized representative) within such timeline and 
     within 2 days of the date of such determination.
       (d) Independent Medical Review.--
       (1) In general.--If a qualified external review entity 
     determines under subsection (c) that a denial of a claim for 
     benefits is eligible for independent medical review, the 
     entity shall refer the denial involved to an independent 
     medical reviewer for the conduct of an independent medical 
     review under this subsection.
       (2) Medically reviewable decisions.--A denial of a claim 
     for benefits is eligible for independent medical review if 
     the benefit for the item or service for which the claim is 
     made would be a covered benefit under the terms and 
     conditions of the plan or coverage but for one (or more) of 
     the following determinations:
       (A) Denials based on medical necessity and 
     appropriateness.--A determination that the item or service is 
     not covered because it is not medically necessary and 
     appropriate or based on the application of substantially 
     equivalent terms.
       (B) Denials based on experimental or investigational 
     treatment.--A determination that the item or service is not 
     covered because it is experimental or investigational or 
     based on the application of substantially equivalent terms.
       (C) Denials otherwise based on an evaluation of medical 
     facts.--A determination that the item or service or condition 
     is not covered based on grounds that require an evaluation of 
     the medical facts by a health care professional in the 
     specific case involved to determine the coverage and extent 
     of coverage of the item or service or condition.
       (3) Independent medical review determination.--
       (A) In general.--An independent medical reviewer under this 
     section shall make a new independent determination with 
     respect to whether or not the denial of a claim for a benefit 
     that is the subject of the review should be upheld, reversed, 
     or modified.
       (B) Standard for determination.--The independent medical 
     reviewer's determination relating to the medical necessity 
     and appropriateness, or the experimental or investigational 
     nature, or the evaluation of the medical facts, of the item, 
     service, or condition involved shall be based on the medical 
     condition of the participant, beneficiary, or enrollee 
     (including the medical records of the participant, 
     beneficiary, or enrollee) and valid, relevant scientific 
     evidence and clinical evidence, including peer-reviewed 
     medical literature or findings and including expert opinion.
       (C) No coverage for excluded benefits.--Nothing in this 
     subsection shall be construed to permit an independent 
     medical reviewer to require that a group health plan, or 
     health insurance issuer offering health insurance coverage, 
     provide coverage for items or services for which benefits are 
     specifically excluded or expressly limited under the plan or 
     coverage in the plain language of the plan document (and 
     which are disclosed under section 121(b)(1)(C)). 
     Notwithstanding any other provision of this Act, any 
     exclusion of an exact medical procedure, any exact time limit 
     on the duration or frequency of coverage, and any exact 
     dollar limit on the amount of coverage that is specifically 
     enumerated and defined (in the plain language of the plan or 
     coverage documents) under the plan or coverage offered by a 
     group health plan or health insurance issuer offering health 
     insurance coverage and that is disclosed under section 
     121(b)(1) shall be considered to govern the scope of the 
     benefits that may be required: Provided, That the terms and 
     conditions of the plan or coverage relating to such an 
     exclusion or limit are in compliance with the requirements of 
     law.
       (D) Evidence and information to be used in medical 
     reviews.--In making a determination under this subsection, 
     the independent medical reviewer shall also consider 
     appropriate and available evidence and information, including 
     the following:
       (i) The determination made by the plan or issuer with 
     respect to the claim upon internal review and the evidence, 
     guidelines, or rationale used by the plan or issuer in 
     reaching such determination.
       (ii) The recommendation of the treating health care 
     professional and the evidence, guidelines, and rationale used 
     by the treating health care professional in reaching such 
     recommendation.
       (iii) Additional relevant evidence or information obtained 
     by the reviewer or submitted by the plan, issuer, 
     participant, beneficiary, or enrollee (or an authorized 
     representative), or treating health care professional.
       (iv) The plan or coverage document.
       (E) Independent determination.--In making determinations 
     under this section, a qualified external review entity and an 
     independent medical reviewer shall--
       (i) consider the claim under review without deference to 
     the determinations made by the plan or issuer or the 
     recommendation of the treating health care professional (if 
     any); and
       (ii) consider, but not be bound by, the definition used by 
     the plan or issuer of ``medically necessary and 
     appropriate'', or ``experimental or investigational'', or 
     other substantially equivalent terms that are used by the 
     plan or issuer to describe medical necessity and 
     appropriateness or experimental or investigational nature of 
     the treatment.
       (F) Determination of independent medical reviewer.--An 
     independent medical reviewer shall, in accordance with the 
     deadlines described in subsection (e), prepare a written 
     determination to uphold, reverse, or modify the denial under 
     review. Such written determination shall include--
       (i) the determination of the reviewer;
       (ii) the specific reasons of the reviewer for such 
     determination, including a summary of the clinical or 
     scientific evidence used in making the determination; and
       (iii) with respect to a determination to reverse or modify 
     the denial under review, a timeframe within which the plan or 
     issuer must comply with such determination.
       (G) Nonbinding nature of additional recommendations.--In 
     addition to the determination under subparagraph (F), the 
     reviewer may provide the plan or issuer and the treating 
     health care professional with additional recommendations in 
     connection with such a determination, but any such 
     recommendations shall not affect (or be treated as part of) 
     the determination and shall not be binding on the plan or 
     issuer.
       (e) Timelines and Notifications.--
       (1) Timelines for independent medical review.--
       (A) Prior authorization determination.--
       (i) In general.--The independent medical reviewer (or 
     reviewers) shall make a determination on a denial of a claim 
     for benefits that is referred to the reviewer under 
     subsection (c)(3) in accordance with the medical exigencies 
     of the case and as soon as possible, but in no case later 
     than 14 days after the date of receipt of information under 
     subsection (c)(2) if the review involves a prior 
     authorization of items or services and in no case later than 
     21 days after the date the request for external review is 
     received.
       (ii) Expedited determination.--Notwithstanding clause (i) 
     and subject to clause (iii), the independent medical reviewer 
     (or reviewers) shall make an expedited determination on a 
     denial of a claim for benefits described in clause (i), when 
     a request for such an expedited determination is made by a 
     participant, beneficiary, or enrollee (or authorized 
     representative) at any time during the process for making a 
     determination, and a health care professional certifies, with 
     the request, that a determination under the timeline 
     described in clause (i) would seriously jeopardize the life 
     or health of the participant, beneficiary, or enrollee or the 
     ability of the participant, beneficiary, or enrollee to 
     maintain or regain maximum function. Such determination shall 
     be made in accordance with the medical exigencies of the case 
     and as soon as possible, but in no case later than 72 hours 
     after the time the request for external review is received by 
     the qualified external review entity.
       (iii) Ongoing care determination.--Notwithstanding clause 
     (i), in the case of a review described in such clause that 
     involves a termination or reduction of care, the notice of 
     the determination shall be completed not later than 24 hours 
     after the time the request for external review is received by 
     the qualified external review entity and before the end of 
     the approved period of care.
       (B) Retrospective determination.--The independent medical 
     reviewer (or reviewers) shall complete a review in the case 
     of a retrospective determination on an appeal of a denial of 
     a claim for benefits that is referred to the reviewer under 
     subsection (c)(3) in no case later than 30 days after the 
     date of receipt of information under subsection (c)(2) and in 
     no case later than 60 days after the date the request for 
     external review is received by the qualified external review 
     entity.
       (2) Notification of determination.--The external review 
     entity shall ensure that the plan or issuer, the participant, 
     beneficiary, or enrollee (or authorized representative) and 
     the treating health care professional (if any) receives a 
     copy of the written determination of the independent medical 
     reviewer prepared under subsection (d)(3)(F). Nothing in this 
     paragraph shall be construed as preventing an entity or 
     reviewer from providing an initial oral notice of the 
     reviewer's determination.
       (3) Form of notices.--Determinations and notices under this 
     subsection shall be written in a manner calculated to be 
     understood by a participant.
       (f) Compliance.--
       (1) Application of determinations.--
       (A) External review determinations binding on plan.--The 
     determinations of an external review entity and an 
     independent medical reviewer under this section shall be 
     binding upon the plan or issuer involved.

[[Page 9519]]

       (B) Compliance with determination.--If the determination of 
     an independent medical reviewer is to reverse or modify the 
     denial, the plan or issuer, upon the receipt of such 
     determination, shall authorize coverage to comply with the 
     medical reviewer's determination in accordance with the 
     timeframe established by the medical reviewer.
       (2) Failure to comply.--
       (A) In general.--If a plan or issuer fails to comply with 
     the timeframe established under paragraph (1)(B) with respect 
     to a participant, beneficiary, or enrollee, where such 
     failure to comply is caused by the plan or issuer, the 
     participant, beneficiary, or enrollee may obtain the items or 
     services involved (in a manner consistent with the 
     determination of the independent external reviewer) from any 
     provider regardless of whether such provider is a 
     participating provider under the plan or coverage.
       (B) Reimbursement.--
       (i) In general.--Where a participant, beneficiary, or 
     enrollee obtains items or services in accordance with 
     subparagraph (A), the plan or issuer involved shall provide 
     for reimbursement of the costs of such items or services. 
     Such reimbursement shall be made to the treating health care 
     professional or to the participant, beneficiary, or enrollee 
     (in the case of a participant, beneficiary, or enrollee who 
     pays for the costs of such items or services).
       (ii) Amount.--The plan or issuer shall fully reimburse a 
     professional, participant, beneficiary, or enrollee under 
     clause (i) for the total costs of the items or services 
     provided (regardless of any plan limitations that may apply 
     to the coverage of such items or services) so long as the 
     items or services were provided in a manner consistent with 
     the determination of the independent medical reviewer.
       (C) Failure to reimburse.--Where a plan or issuer fails to 
     provide reimbursement to a professional, participant, 
     beneficiary, or enrollee in accordance with this paragraph, 
     the professional, participant, beneficiary, or enrollee may 
     commence a civil action (or utilize other remedies available 
     under law) to recover only the amount of any such 
     reimbursement that is owed by the plan or issuer and any 
     necessary legal costs or expenses (including attorney's fees) 
     incurred in recovering such reimbursement.
       (D) Available remedies.--The remedies provided under this 
     paragraph are in addition to any other available remedies.
       (3) Penalties against authorized officials for refusing to 
     authorize the determination of an external review entity.--
       (A) Monetary penalties.--
       (i) In general.--In any case in which the determination of 
     an external review entity is not followed by a group health 
     plan, or by a health insurance issuer offering health 
     insurance coverage, any person who, acting in the capacity of 
     authorizing the benefit, causes such refusal may, in the 
     discretion of a court of competent jurisdiction, be liable to 
     an aggrieved participant, beneficiary, or enrollee for a 
     civil penalty in an amount of up to $1,000 a day from the 
     date on which the determination was transmitted to the plan 
     or issuer by the external review entity until the date the 
     refusal to provide the benefit is corrected.
       (ii) Additional penalty for failing to follow timeline.--In 
     any case in which treatment was not commenced by the plan in 
     accordance with the determination of an independent external 
     reviewer, the Secretary shall assess a civil penalty of 
     $10,000 against the plan and the plan shall pay such penalty 
     to the participant, beneficiary, or enrollee involved.
       (B) Cease and desist order and order of attorney's fees.--
     In any action described in subparagraph (A) brought by a 
     participant, beneficiary, or enrollee with respect to a group 
     health plan, or a health insurance issuer offering health 
     insurance coverage, in which a plaintiff alleges that a 
     person referred to in such subparagraph has taken an action 
     resulting in a refusal of a benefit determined by an external 
     appeal entity to be covered, or has failed to take an action 
     for which such person is responsible under the terms and 
     conditions of the plan or coverage and which is necessary 
     under the plan or coverage for authorizing a benefit, the 
     court shall cause to be served on the defendant an order 
     requiring the defendant--
       (i) to cease and desist from the alleged action or failure 
     to act; and
       (ii) to pay to the plaintiff a reasonable attorney's fee 
     and other reasonable costs relating to the prosecution of the 
     action on the charges on which the plaintiff prevails.
       (C) Additional civil penalties.--
       (i) In general.--In addition to any penalty imposed under 
     subparagraph (A) or (B), the appropriate Secretary may assess 
     a civil penalty against a person acting in the capacity of 
     authorizing a benefit determined by an external review entity 
     for one or more group health plans, or health insurance 
     issuers offering health insurance coverage, for--

       (I) any pattern or practice of repeated refusal to 
     authorize a benefit determined by an external appeal entity 
     to be covered; or
       (II) any pattern or practice of repeated violations of the 
     requirements of this section with respect to such plan or 
     coverage.

       (ii) Standard of proof and amount of penalty.--Such penalty 
     shall be payable only upon proof by clear and convincing 
     evidence of such pattern or practice and shall be in an 
     amount not to exceed the lesser of--

       (I) 25 percent of the aggregate value of benefits shown by 
     the appropriate Secretary to have not been provided, or 
     unlawfully delayed, in violation of this section under such 
     pattern or practice; or
       (II) $500,000.

       (D) Removal and disqualification.--Any person acting in the 
     capacity of authorizing benefits who has engaged in any such 
     pattern or practice described in subparagraph (C)(i) with 
     respect to a plan or coverage, upon the petition of the 
     appropriate Secretary, may be removed by the court from such 
     position, and from any other involvement, with respect to 
     such a plan or coverage, and may be precluded from returning 
     to any such position or involvement for a period determined 
     by the court.
       (4) Protection of legal rights.--Nothing in this subsection 
     or subtitle shall be construed as altering or eliminating any 
     cause of action or legal rights or remedies of participants, 
     beneficiaries, enrollees, and others under State or Federal 
     law (including sections 502 and 503 of the Employee 
     Retirement Income Security Act of 1974), including the right 
     to file judicial actions to enforce rights.
       (g) Qualifications of Independent Medical Reviewers.--
       (1) In general.--In referring a denial to 1 or more 
     individuals to conduct independent medical review under 
     subsection (c), the qualified external review entity shall 
     ensure that--
       (A) each independent medical reviewer meets the 
     qualifications described in paragraphs (2) and (3);
       (B) with respect to each review at least 1 such reviewer 
     meets the requirements described in paragraphs (4) and (5); 
     and
       (C) compensation provided by the entity to the reviewer is 
     consistent with paragraph (6).
       (2) Licensure and expertise.--Each independent medical 
     reviewer shall be a physician (allopathic or osteopathic) or 
     health care professional who--
       (A) is appropriately credentialed or licensed in 1 or more 
     States to deliver health care services; and
       (B) typically treats the condition, makes the diagnosis, or 
     provides the type of treatment under review.
       (3) Independence.--
       (A) In general.--Subject to subparagraph (B), each 
     independent medical reviewer in a case shall--
       (i) not be a related party (as defined in paragraph (7));
       (ii) not have a material familial, financial, or 
     professional relationship with such a party; and
       (iii) not otherwise have a conflict of interest with such a 
     party (as determined under regulations).
       (B) Exception.--Nothing in subparagraph (A) shall be 
     construed to--
       (i) prohibit an individual, solely on the basis of 
     affiliation with the plan or issuer, from serving as an 
     independent medical reviewer if--

       (I) a non-affiliated individual is not reasonably 
     available;
       (II) the affiliated individual is not involved in the 
     provision of items or services in the case under review;
       (III) the fact of such an affiliation is disclosed to the 
     plan or issuer and the participant, beneficiary, or enrollee 
     (or authorized representative) and neither party objects; and
       (IV) the affiliated individual is not an employee of the 
     plan or issuer and does not provide services exclusively or 
     primarily to or on behalf of the plan or issuer;

       (ii) prohibit an individual who has staff privileges at the 
     institution where the treatment involved takes place from 
     serving as an independent medical reviewer merely on the 
     basis of such affiliation if the affiliation is disclosed to 
     the plan or issuer and the participant, beneficiary, or 
     enrollee (or authorized representative), and neither party 
     objects; or
       (iii) prohibit receipt of compensation by an independent 
     medical reviewer from an entity if the compensation is 
     provided consistent with paragraph (6).
       (4) Practicing health care professional in same field.--
       (A) In general.--In a case involving treatment, or the 
     provision of items or services--
       (i) by a physician, a reviewer shall be a practicing 
     physician (allopathic or osteopathic) of the same or similar 
     specialty, as a physician who, acting within the appropriate 
     scope of practice within the State in which the service is 
     provided or rendered, typically treats the condition, makes 
     the diagnosis, or provides the type of treatment under 
     review; or
       (ii) by a non-physician health care professional, a 
     reviewer (or reviewers) shall include at least one practicing 
     non-physician health care professional of the same or similar 
     specialty as the non-physician health care professional who, 
     acting within the appropriate scope of practice within the 
     State in which the service is provided or rendered, typically 
     treats the condition, makes the diagnosis, or provides the 
     type of treatment under review.
       (B) Practicing defined.--For purposes of this paragraph, 
     the term ``practicing''

[[Page 9520]]

     means, with respect to an individual who is a physician or 
     other health care professional that the individual provides 
     health care services to individual patients on average at 
     least 2 days per week.
       (5) Pediatric expertise.--In the case of an external review 
     relating to a child, a reviewer shall have expertise under 
     paragraph (2) in pediatrics.
       (6) Limitations on reviewer compensation.--Compensation 
     provided by a qualified external review entity to an 
     independent medical reviewer in connection with a review 
     under this section shall--
       (A) not exceed a reasonable level; and
       (B) not be contingent on the decision rendered by the 
     reviewer.
       (7) Related party defined.--For purposes of this section, 
     the term ``related party'' means, with respect to a denial of 
     a claim under a plan or coverage relating to a participant, 
     beneficiary, or enrollee, any of the following:
       (A) The plan, plan sponsor, or issuer involved, or any 
     fiduciary, officer, director, or employee of such plan, plan 
     sponsor, or issuer.
       (B) The participant, beneficiary, or enrollee (or 
     authorized representative).
       (C) The health care professional that provides the items or 
     services involved in the denial.
       (D) The institution at which the items or services (or 
     treatment) involved in the denial are provided.
       (E) The manufacturer of any drug or other item that is 
     included in the items or services involved in the denial.
       (F) Any other party determined under any regulations to 
     have a substantial interest in the denial involved.
       (h) Qualified External Review Entities.--
       (1) Selection of qualified external review entities.--
       (A) Limitation on plan or issuer selection.--The 
     appropriate Secretary shall implement procedures--
       (i) to assure that the selection process among qualified 
     external review entities will not create any incentives for 
     external review entities to make a decision in a biased 
     manner; and
       (ii) for auditing a sample of decisions by such entities to 
     assure that no such decisions are made in a biased manner.

     No such selection process under the procedures implemented by 
     the appropriate Secretary may give either the patient or the 
     plan or issuer any ability to determine or influence the 
     selection of a qualified external review entity to review the 
     case of any participant, beneficiary, or enrollee.
       (B) State authority with respect to qualified external 
     review entities for health insurance issuers.--With respect 
     to health insurance issuers offering health insurance 
     coverage in a State, the State may provide for external 
     review activities to be conducted by a qualified external 
     appeal entity that is designated by the State or that is 
     selected by the State in a manner determined by the State to 
     assure an unbiased determination.
       (2) Contract with qualified external review entity.--Except 
     as provided in paragraph (1)(B), the external review process 
     of a plan or issuer under this section shall be conducted 
     under a contract between the plan or issuer and 1 or more 
     qualified external review entities (as defined in paragraph 
     (4)(A)).
       (3) Terms and conditions of contract.--The terms and 
     conditions of a contract under paragraph (2) shall--
       (A) be consistent with the standards the appropriate 
     Secretary shall establish to assure there is no real or 
     apparent conflict of interest in the conduct of external 
     review activities; and
       (B) provide that the costs of the external review process 
     shall be borne by the plan or issuer.

     Subparagraph (B) shall not be construed as applying to the 
     imposition of a filing fee under subsection (b)(2)(A)(iv) or 
     costs incurred by the participant, beneficiary, or enrollee 
     (or authorized representative) or treating health care 
     professional (if any) in support of the review, including the 
     provision of additional evidence or information.
       (4) Qualifications.--
       (A) In general.--In this section, the term ``qualified 
     external review entity'' means, in relation to a plan or 
     issuer, an entity that is initially certified (and 
     periodically recertified) under subparagraph (C) as meeting 
     the following requirements:
       (i) The entity has (directly or through contracts or other 
     arrangements) sufficient medical, legal, and other expertise 
     and sufficient staffing to carry out duties of a qualified 
     external review entity under this section on a timely basis, 
     including making determinations under subsection (b)(2)(A) 
     and providing for independent medical reviews under 
     subsection (d).
       (ii) The entity is not a plan or issuer or an affiliate or 
     a subsidiary of a plan or issuer, and is not an affiliate or 
     subsidiary of a professional or trade association of plans or 
     issuers or of health care providers.
       (iii) The entity has provided assurances that it will 
     conduct external review activities consistent with the 
     applicable requirements of this section and standards 
     specified in subparagraph (C), including that it will not 
     conduct any external review activities in a case unless the 
     independence requirements of subparagraph (B) are met with 
     respect to the case.
       (iv) The entity has provided assurances that it will 
     provide information in a timely manner under subparagraph 
     (D).
       (v) The entity meets such other requirements as the 
     appropriate Secretary provides by regulation.
       (B) Independence requirements.--
       (i) In general.--Subject to clause (ii), an entity meets 
     the independence requirements of this subparagraph with 
     respect to any case if the entity--

       (I) is not a related party (as defined in subsection 
     (g)(7));
       (II) does not have a material familial, financial, or 
     professional relationship with such a party; and
       (III) does not otherwise have a conflict of interest with 
     such a party (as determined under regulations).

       (ii) Exception for reasonable compensation.--Nothing in 
     clause (i) shall be construed to prohibit receipt by a 
     qualified external review entity of compensation from a plan 
     or issuer for the conduct of external review activities under 
     this section if the compensation is provided consistent with 
     clause (iii).
       (iii) Limitations on entity compensation.--Compensation 
     provided by a plan or issuer to a qualified external review 
     entity in connection with reviews under this section shall--

       (I) not exceed a reasonable level; and
       (II) not be contingent on any decision rendered by the 
     entity or by any independent medical reviewer.

       (C) Certification and recertification process.--
       (i) In general.--The initial certification and 
     recertification of a qualified external review entity shall 
     be made--

       (I) under a process that is recognized or approved by the 
     appropriate Secretary; or
       (II) by a qualified private standard-setting organization 
     that is approved by the appropriate Secretary under clause 
     (iii).

     In taking action under subclause (I), the appropriate 
     Secretary shall give deference to entities that are under 
     contract with the Federal Government or with an applicable 
     State authority to perform functions of the type performed by 
     qualified external review entities.
       (ii) Process.--The appropriate Secretary shall not 
     recognize or approve a process under clause (i)(I) unless the 
     process applies standards (as promulgated in regulations) 
     that ensure that a qualified external review entity--

       (I) will carry out (and has carried out, in the case of 
     recertification) the responsibilities of such an entity in 
     accordance with this section, including meeting applicable 
     deadlines;
       (II) will meet (and has met, in the case of 
     recertification) appropriate indicators of fiscal integrity;
       (III) will maintain (and has maintained, in the case of 
     recertification) appropriate confidentiality with respect to 
     individually identifiable health information obtained in the 
     course of conducting external review activities; and
       (IV) in the case of recertification, shall review the 
     matters described in clause (iv).

       (iii) Approval of qualified private standard-setting 
     organizations.--For purposes of clause (i)(II), the 
     appropriate Secretary may approve a qualified private 
     standard-setting organization if such Secretary finds that 
     the organization only certifies (or recertifies) external 
     review entities that meet at least the standards required for 
     the certification (or recertification) of external review 
     entities under clause (ii).
       (iv) Considerations in recertifications.--In conducting 
     recertifications of a qualified external review entity under 
     this paragraph, the appropriate Secretary or organization 
     conducting the recertification shall review compliance of the 
     entity with the requirements for conducting external review 
     activities under this section, including the following:

       (I) Provision of information under subparagraph (D).
       (II) Adherence to applicable deadlines (both by the entity 
     and by independent medical reviewers it refers cases to).
       (III) Compliance with limitations on compensation (with 
     respect to both the entity and independent medical reviewers 
     it refers cases to).
       (IV) Compliance with applicable independence requirements.
       (V) Compliance with the requirement of subsection (d)(1) 
     that only medically reviewable decisions shall be the subject 
     of independent medical review and with the requirement of 
     subsection (d)(3) that independent medical reviewers may not 
     require coverage for specifically excluded benefits.

       (v) Period of certification or recertification.--A 
     certification or recertification provided under this 
     paragraph shall extend for a period not to exceed 2 years.
       (vi) Revocation.--A certification or recertification under 
     this paragraph may be revoked by the appropriate Secretary or 
     by the organization providing such certification upon a 
     showing of cause. The Secretary, or organization, shall 
     revoke a certification or

[[Page 9521]]

     deny a recertification with respect to an entity if there is 
     a showing that the entity has a pattern or practice of 
     ordering coverage for benefits that are specifically excluded 
     under the plan or coverage.
       (vii) Petition for denial or withdrawal.--An individual may 
     petition the Secretary, or an organization providing the 
     certification involves, for a denial of recertification or a 
     withdrawal of a certification with respect to an entity under 
     this subparagraph if there is a pattern or practice of such 
     entity failing to meet a requirement of this section.
       (viii) Sufficient number of entities.--The appropriate 
     Secretary shall certify and recertify a number of external 
     review entities which is sufficient to ensure the timely and 
     efficient provision of review services.
       (D) Provision of information.--
       (i) In general.--A qualified external review entity shall 
     provide to the appropriate Secretary, in such manner and at 
     such times as such Secretary may require, such information 
     (relating to the denials which have been referred to the 
     entity for the conduct of external review under this section) 
     as such Secretary determines appropriate to assure compliance 
     with the independence and other requirements of this section 
     to monitor and assess the quality of its external review 
     activities and lack of bias in making determinations. Such 
     information shall include information described in clause 
     (ii) but shall not include individually identifiable medical 
     information.
       (ii) Information to be included.--The information described 
     in this subclause with respect to an entity is as follows:

       (I) The number and types of denials for which a request for 
     review has been received by the entity.
       (II) The disposition by the entity of such denials, 
     including the number referred to a independent medical 
     reviewer and the reasons for such dispositions (including the 
     application of exclusions), on a plan or issuer-specific 
     basis and on a health care specialty-specific basis.
       (III) The length of time in making determinations with 
     respect to such denials.
       (IV) Updated information on the information required to be 
     submitted as a condition of certification with respect to the 
     entity's performance of external review activities.

       (iii) Information to be provided to certifying 
     organization.--

       (I) In general.--In the case of a qualified external review 
     entity which is certified (or recertified) under this 
     subsection by a qualified private standard-setting 
     organization, at the request of the organization, the entity 
     shall provide the organization with the information provided 
     to the appropriate Secretary under clause (i).
       (II) Additional information.--Nothing in this subparagraph 
     shall be construed as preventing such an organization from 
     requiring additional information as a condition of 
     certification or recertification of an entity.

       (iv) Use of information.--Information provided under this 
     subparagraph may be used by the appropriate Secretary and 
     qualified private standard-setting organizations to conduct 
     oversight of qualified external review entities, including 
     recertification of such entities, and shall be made available 
     to the public in an appropriate manner.
       (E) Limitation on liability.--No qualified external review 
     entity having a contract with a plan or issuer, and no person 
     who is employed by any such entity or who furnishes 
     professional services to such entity (including as an 
     independent medical reviewer), shall be held by reason of the 
     performance of any duty, function, or activity required or 
     authorized pursuant to this section, to be civilly liable 
     under any law of the United States or of any State (or 
     political subdivision thereof) if there was no actual malice 
     or gross misconduct in the performance of such duty, 
     function, or activity.
       (5) Report.--Not later than 12 months after the general 
     effective date referred to in section 601, the General 
     Accounting Office shall prepare and submit to the appropriate 
     committees of Congress a report concerning--
       (A) the information that is provided under paragraph 
     (3)(D);
       (B) the number of denials that have been upheld by 
     independent medical reviewers and the number of denials that 
     have been reversed by such reviewers; and
       (C) the extent to which independent medical reviewers are 
     requiring coverage for benefits that are specifically 
     excluded under the plan or coverage.

     SEC. 105. HEALTH CARE CONSUMER ASSISTANCE FUND.

       (a) Grants.--
       (1) In general.--The Secretary of Health and Human Services 
     (referred to in this section as the ``Secretary'') shall 
     establish a fund, to be known as the ``Health Care Consumer 
     Assistance Fund'', to be used to award grants to eligible 
     States to carry out consumer assistance activities (including 
     programs established by States prior to the enactment of this 
     Act) designed to provide information, assistance, and 
     referrals to consumers of health insurance products.
       (2) State eligibility.--To be eligible to receive a grant 
     under this subsection a State shall prepare and submit to the 
     Secretary an application at such time, in such manner, and 
     containing such information as the Secretary may require, 
     including a State plan that describes--
       (A) the manner in which the State will ensure that the 
     health care consumer assistance office (established under 
     paragraph (4)) will educate and assist health care consumers 
     in accessing needed care;
       (B) the manner in which the State will coordinate and 
     distinguish the services provided by the health care consumer 
     assistance office with the services provided by Federal, 
     State and local health-related ombudsman, information, 
     protection and advocacy, insurance, and fraud and abuse 
     programs;
       (C) the manner in which the State will provide information, 
     outreach, and services to underserved, minority populations 
     with limited English proficiency and populations residing in 
     rural areas;
       (D) the manner in which the State will oversee the health 
     care consumer assistance office, its activities, product 
     materials and evaluate program effectiveness;
       (E) the manner in which the State will ensure that funds 
     made available under this section will be used to supplement, 
     and not supplant, any other Federal, State, or local funds 
     expended to provide services for programs described under 
     this section and those described in subparagraphs (C) and 
     (D);
       (F) the manner in which the State will ensure that health 
     care consumer office personnel have the professional 
     background and training to carry out the activities of the 
     office; and
       (G) the manner in which the State will ensure that 
     consumers have direct access to consumer assistance personnel 
     during regular business hours.
       (3) Amount of grant.--
       (A) In general.--From amounts appropriated under subsection 
     (b) for a fiscal year, the Secretary shall award a grant to a 
     State in an amount that bears the same ratio to such amounts 
     as the number of individuals within the State covered under a 
     group health plan or under health insurance coverage offered 
     by a health insurance issuer bears to the total number of 
     individuals so covered in all States (as determined by the 
     Secretary). Any amounts provided to a State under this 
     subsection that are not used by the State shall be remitted 
     to the Secretary and reallocated in accordance with this 
     subparagraph.
       (B) Minimum amount.--In no case shall the amount provided 
     to a State under a grant under this subsection for a fiscal 
     year be less than an amount equal to 0.5 percent of the 
     amount appropriated for such fiscal year to carry out this 
     section.
       (C) Non-federal contributions.--A State will provide for 
     the collection of non-Federal contributions for the operation 
     of the office in an amount that is not less than 25 percent 
     of the amount of Federal funds provided to the State under 
     this section.
       (4) Provision of funds for establishment of office.--
       (A) In general.--From amounts provided under a grant under 
     this subsection, a State shall, directly or through a 
     contract with an independent, nonprofit entity with 
     demonstrated experience in serving the needs of health care 
     consumers, provide for the establishment and operation of a 
     State health care consumer assistance office.
       (B) Eligibility of entity.--To be eligible to enter into a 
     contract under subparagraph (A), an entity shall demonstrate 
     that it has the technical, organizational, and professional 
     capacity to deliver the services described in subsection (b) 
     to all public and private health insurance participants, 
     beneficiaries, enrollees, or prospective enrollees.
       (C) Existing state entity.--Nothing in this section shall 
     prevent the funding of an existing health care consumer 
     assistance program that otherwise meets the requirements of 
     this section.
       (b) Use of Funds.--
       (1) By state.--A State shall use amounts provided under a 
     grant awarded under this section to carry out consumer 
     assistance activities directly or by contract with an 
     independent, non-profit organization. An eligible entity may 
     use some reasonable amount of such grant to ensure the 
     adequate training of personnel carrying out such activities. 
     To receive amounts under this subsection, an eligible entity 
     shall provide consumer assistance services, including--
       (A) the operation of a toll-free telephone hotline to 
     respond to consumer requests;
       (B) the dissemination of appropriate educational materials 
     on available health insurance products and on how best to 
     access health care and the rights and responsibilities of 
     health care consumers;
       (C) the provision of education on effective methods to 
     promptly and efficiently resolve questions, problems, and 
     grievances;
       (D) the coordination of educational and outreach efforts 
     with health plans, health care providers, payers, and 
     governmental agencies;
       (E) referrals to appropriate private and public entities to 
     resolve questions, problems and grievances; and
       (F) the provision of information and assistance, including 
     acting as an authorized representative, regarding internal, 
     external, or administrative grievances or appeals procedures 
     in nonlitigative settings to appeal the denial, termination, 
     or reduction of health care services, or the refusal to pay 
     for such

[[Page 9522]]

     services, under a group health plan or health insurance 
     coverage offered by a health insurance issuer.
       (2) Confidentiality and access to information.--
       (A) State entity.--With respect to a State that directly 
     establishes a health care consumer assistance office, such 
     office shall establish and implement procedures and protocols 
     in accordance with applicable Federal and State laws.
       (B) Contract entity.--With respect to a State that, through 
     contract, establishes a health care consumer assistance 
     office, such office shall establish and implement procedures 
     and protocols, consistent with applicable Federal and State 
     laws, to ensure the confidentiality of all information shared 
     by a participant, beneficiary, enrollee, or their personal 
     representative and their health care providers, group health 
     plans, or health insurance insurers with the office and to 
     ensure that no such information is used by the office, or 
     released or disclosed to State agencies or outside persons or 
     entities without the prior written authorization (in 
     accordance with section 164.508 of title 45, Code of Federal 
     Regulations) of the individual or personal representative. 
     The office may, consistent with applicable Federal and State 
     confidentiality laws, collect, use or disclose aggregate 
     information that is not individually identifiable (as defined 
     in section 164.501 of title 45, Code of Federal Regulations). 
     The office shall provide a written description of the 
     policies and procedures of the office with respect to the 
     manner in which health information may be used or disclosed 
     to carry out consumer assistance activities. The office shall 
     provide health care providers, group health plans, or health 
     insurance issuers with a written authorization (in accordance 
     with section 164.508 of title 45, Code of Federal 
     Regulations) to allow the office to obtain medical 
     information relevant to the matter before the office.
       (3) Availability of services.--The health care consumer 
     assistance office of a State shall not discriminate in the 
     provision of information, referrals, and services regardless 
     of the source of the individual's health insurance coverage 
     or prospective coverage, including individuals covered under 
     a group health plan or health insurance coverage offered by a 
     health insurance issuer, the medicare or medicaid programs 
     under title XVIII or XIX of the Social Security Act (42 
     U.S.C. 1395 and 1396 et seq.), or under any other Federal or 
     State health care program.
       (4) Designation of responsibilities.--
       (A) Within existing state entity.--If the health care 
     consumer assistance office of a State is located within an 
     existing State regulatory agency or office of an elected 
     State official, the State shall ensure that--
       (i) there is a separate delineation of the funding, 
     activities, and responsibilities of the office as compared to 
     the other funding, activities, and responsibilities of the 
     agency; and
       (ii) the office establishes and implements procedures and 
     protocols to ensure the confidentiality of all information 
     shared by a participant, beneficiary, or enrollee or their 
     personal representative and their health care providers, 
     group health plans, or health insurance issuers with the 
     office and to ensure that no information is disclosed to the 
     State agency or office without the written authorization of 
     the individual or their personal representative in accordance 
     with paragraph (2).
       (B) Contract entity.--In the case of an entity that enters 
     into a contract with a State under subsection (a)(3), the 
     entity shall provide assurances that the entity has no 
     conflict of interest in carrying out the activities of the 
     office and that the entity is independent of group health 
     plans, health insurance issuers, providers, payers, and 
     regulators of health care.
       (5) Subcontracts.--The health care consumer assistance 
     office of a State may carry out activities and provide 
     services through contracts entered into with 1 or more 
     nonprofit entities so long as the office can demonstrate that 
     all of the requirements of this section are complied with by 
     the office.
       (6) Term.--A contract entered into under this subsection 
     shall be for a term of 3 years.
       (c) Report.--Not later than 1 year after the Secretary 
     first awards grants under this section, and annually 
     thereafter, the Secretary shall prepare and submit to the 
     appropriate committees of Congress a report concerning the 
     activities funded under this section and the effectiveness of 
     such activities in resolving health care-related problems and 
     grievances.
       (d) Authorization of Appropriations.--There are authorized 
     to be appropriated such sums as may be necessary to carry out 
     this section.

                       Subtitle B--Access to Care

     SEC. 111. CONSUMER CHOICE OPTION.

       (a) In General.--If--
       (1) a health insurance issuer providing health insurance 
     coverage in connection with a group health plan offers to 
     enrollees health insurance coverage which provides for 
     coverage of services (including physician pathology services) 
     only if such services are furnished through health care 
     professionals and providers who are members of a network of 
     health care professionals and providers who have entered into 
     a contract with the issuer to provide such services, or
       (2) a group health plan offers to participants or 
     beneficiaries health benefits which provide for coverage of 
     services only if such services are furnished through health 
     care professionals and providers who are members of a network 
     of health care professionals and providers who have entered 
     into a contract with the plan to provide such services,

     then the issuer or plan shall also offer or arrange to be 
     offered to such enrollees, participants, or beneficiaries (at 
     the time of enrollment and during an annual open season as 
     provided under subsection (c)) the option of health insurance 
     coverage or health benefits which provide for coverage of 
     such services which are not furnished through health care 
     professionals and providers who are members of such a network 
     unless such enrollees, participants, or beneficiaries are 
     offered such non-network coverage through another group 
     health plan or through another health insurance issuer in the 
     group market.
       (b) Additional Costs.--The amount of any additional premium 
     charged by the health insurance issuer or group health plan 
     for the additional cost of the creation and maintenance of 
     the option described in subsection (a) and the amount of any 
     additional cost sharing imposed under such option shall be 
     borne by the enrollee, participant, or beneficiary unless it 
     is paid by the health plan sponsor or group health plan 
     through agreement with the health insurance issuer.
       (c) Open Season.--An enrollee, participant, or beneficiary, 
     may change to the offering provided under this section only 
     during a time period determined by the health insurance 
     issuer or group health plan. Such time period shall occur at 
     least annually.

     SEC. 112. CHOICE OF HEALTH CARE PROFESSIONAL.

       (a) Primary Care.--If a group health plan, or a health 
     insurance issuer that offers health insurance coverage, 
     requires or provides for designation by a participant, 
     beneficiary, or enrollee of a participating primary care 
     provider, then the plan or issuer shall permit each 
     participant, beneficiary, and enrollee to designate any 
     participating primary care provider who is available to 
     accept such individual.
       (b) Specialists.--
       (1) In general.--Subject to paragraph (2), a group health 
     plan and a health insurance issuer that offers health 
     insurance coverage shall permit each participant, 
     beneficiary, or enrollee to receive medically necessary and 
     appropriate specialty care, pursuant to appropriate referral 
     procedures, from any qualified participating health care 
     professional who is available to accept such individual for 
     such care.
       (2) Limitation.--Paragraph (1) shall not apply to specialty 
     care if the plan or issuer clearly informs participants, 
     beneficiaries, and enrollees of the limitations on choice of 
     participating health care professionals with respect to such 
     care.
       (3) Construction.--Nothing in this subsection shall be 
     construed as affecting the application of section 114 
     (relating to access to specialty care).

     SEC. 113. ACCESS TO EMERGENCY CARE.

       (a) Coverage of Emergency Services.--
       (1) In general.--If a group health plan, or health 
     insurance coverage offered by a health insurance issuer, 
     provides or covers any benefits with respect to services in 
     an emergency department of a hospital, the plan or issuer 
     shall cover emergency services (as defined in paragraph 
     (2)(B))--
       (A) without the need for any prior authorization 
     determination;
       (B) whether the health care provider furnishing such 
     services is a participating provider with respect to such 
     services;
       (C) in a manner so that, if such services are provided to a 
     participant, beneficiary, or enrollee--
       (i) by a nonparticipating health care provider with or 
     without prior authorization, or
       (ii) by a participating health care provider without prior 
     authorization,

     the participant, beneficiary, or enrollee is not liable for 
     amounts that exceed the amounts of liability that would be 
     incurred if the services were provided by a participating 
     health care provider with prior authorization; and
       (D) without regard to any other term or condition of such 
     coverage (other than exclusion or coordination of benefits, 
     or an affiliation or waiting period, permitted under section 
     2701 of the Public Health Service Act, section 701 of the 
     Employee Retirement Income Security Act of 1974, or section 
     9801 of the Internal Revenue Code of 1986, and other than 
     applicable cost-sharing).
       (2) Definitions.--In this section:
       (A) Emergency medical condition.--The term ``emergency 
     medical condition'' means a medical condition manifesting 
     itself by acute symptoms of sufficient severity (including 
     severe pain) such that a prudent layperson, who possesses an 
     average knowledge of health and medicine, could reasonably 
     expect the absence of immediate medical attention to result 
     in a condition described in clause (i), (ii), or (iii) of 
     section 1867(e)(1)(A) of the Social Security Act.
       (B) Emergency services.--The term ``emergency services'' 
     means, with respect to an emergency medical condition--

[[Page 9523]]

       (i) a medical screening examination (as required under 
     section 1867 of the Social Security Act) that is within the 
     capability of the emergency department of a hospital, 
     including ancillary services routinely available to the 
     emergency department to evaluate such emergency medical 
     condition, and
       (ii) within the capabilities of the staff and facilities 
     available at the hospital, such further medical examination 
     and treatment as are required under section 1867 of such Act 
     to stabilize the patient.
       (C) Stabilize.--The term ``to stabilize'', with respect to 
     an emergency medical condition (as defined in subparagraph 
     (A)), has the meaning given in section 1867(e)(3) of the 
     Social Security Act (42 U.S.C. 1395dd(e)(3)).
       (b) Reimbursement for Maintenance Care and Post-
     stabilization Care.--A group health plan, and health 
     insurance coverage offered by a health insurance issuer, must 
     provide reimbursement for maintenance care and post-
     stabilization care in accordance with the requirements of 
     section 1852(d)(2) of the Social Security Act (42 U.S.C. 
     1395w-22(d)(2)). Such reimbursement shall be provided in a 
     manner consistent with subsection (a)(1)(C).
       (c) Coverage of Emergency Ambulance Services.--
       (1) In general.--If a group health plan, or health 
     insurance coverage provided by a health insurance issuer, 
     provides any benefits with respect to ambulance services and 
     emergency services, the plan or issuer shall cover emergency 
     ambulance services (as defined in paragraph (2)) furnished 
     under the plan or coverage under the same terms and 
     conditions under subparagraphs (A) through (D) of subsection 
     (a)(1) under which coverage is provided for emergency 
     services.
       (2) Emergency ambulance services.--For purposes of this 
     subsection, the term ``emergency ambulance services'' means 
     ambulance services (as defined for purposes of section 
     1861(s)(7) of the Social Security Act) furnished to transport 
     an individual who has an emergency medical condition (as 
     defined in subsection (a)(2)(A)) to a hospital for the 
     receipt of emergency services (as defined in subsection 
     (a)(2)(B)) in a case in which the emergency services are 
     covered under the plan or coverage pursuant to subsection 
     (a)(1) and a prudent layperson, with an average knowledge of 
     health and medicine, could reasonably expect that the absence 
     of such transport would result in placing the health of the 
     individual in serious jeopardy, serious impairment of bodily 
     function, or serious dysfunction of any bodily organ or part.

     SEC. 114. TIMELY ACCESS TO SPECIALISTS.

       (a) Timely Access.--
       (1) In general.--A group health plan and a health insurance 
     issuer offering health insurance coverage shall ensure that 
     participants, beneficiaries, and enrollees receive timely 
     access to specialists who are appropriate to the condition 
     of, and accessible to, the participant, beneficiary, or 
     enrollee, when such specialty care is a covered benefit under 
     the plan or coverage.
       (2) Rule of construction.--Nothing in paragraph (1) shall 
     be construed--
       (A) to require the coverage under a group health plan or 
     health insurance coverage of benefits or services;
       (B) to prohibit a plan or issuer from including providers 
     in the network only to the extent necessary to meet the needs 
     of the plan's or issuer's participants, beneficiaries, or 
     enrollees; or
       (C) to override any State licensure or scope-of-practice 
     law.
       (3) Access to certain providers.--
       (A) In general.--With respect to specialty care under this 
     section, if a participating specialist is not available and 
     qualified to provide such care to the participant, 
     beneficiary, or enrollee, the plan or issuer shall provide 
     for coverage of such care by a nonparticipating specialist.
       (B) Treatment of nonparticipating providers.--If a 
     participant, beneficiary, or enrollee receives care from a 
     nonparticipating specialist pursuant to subparagraph (A), 
     such specialty care shall be provided at no additional cost 
     to the participant, beneficiary, or enrollee beyond what the 
     participant, beneficiary, or enrollee would otherwise pay for 
     such specialty care if provided by a participating 
     specialist.
       (b) Referrals.--
       (1) Authorization.--Subject to subsection (a)(1), a group 
     health plan or health insurance issuer may require an 
     authorization in order to obtain coverage for specialty 
     services under this section. Any such authorization--
       (A) shall be for an appropriate duration of time or number 
     of referrals, including an authorization for a standing 
     referral where appropriate; and
       (B) may not be refused solely because the authorization 
     involves services of a nonparticipating specialist (described 
     in subsection (a)(3)).
       (2) Referrals for ongoing special conditions.--
       (A) In general.--Subject to subsection (a)(1), a group 
     health plan and a health insurance issuer shall permit a 
     participant, beneficiary, or enrollee who has an ongoing 
     special condition (as defined in subparagraph (B)) to receive 
     a referral to a specialist for the treatment of such 
     condition and such specialist may authorize such referrals, 
     procedures, tests, and other medical services with respect to 
     such condition, or coordinate the care for such condition, 
     subject to the terms of a treatment plan (if any) referred to 
     in subsection (c) with respect to the condition.
       (B) Ongoing special condition defined.--In this subsection, 
     the term ``ongoing special condition'' means a condition or 
     disease that--
       (i) is life-threatening, degenerative, potentially 
     disabling, or congenital; and
       (ii) requires specialized medical care over a prolonged 
     period of time.
       (c) Treatment Plans.--
       (1) In general.--A group health plan or health insurance 
     issuer may require that the specialty care be provided--
       (A) pursuant to a treatment plan, but only if the treatment 
     plan--
       (i) is developed by the specialist, in consultation with 
     the case manager or primary care provider, and the 
     participant, beneficiary, or enrollee, and
       (ii) is approved by the plan or issuer in a timely manner, 
     if the plan or issuer requires such approval; and
       (B) in accordance with applicable quality assurance and 
     utilization review standards of the plan or issuer.
       (2) Notification.--Nothing in paragraph (1) shall be 
     construed as prohibiting a plan or issuer from requiring the 
     specialist to provide the plan or issuer with regular updates 
     on the specialty care provided, as well as all other 
     reasonably necessary medical information.
       (d) Specialist Defined.--For purposes of this section, the 
     term ``specialist'' means, with respect to the condition of 
     the participant, beneficiary, or enrollee, a health care 
     professional, facility, or center that has adequate expertise 
     through appropriate training and experience (including, in 
     the case of a child, appropriate pediatric expertise) to 
     provide high quality care in treating the condition.

     SEC. 115. PATIENT ACCESS TO OBSTETRICAL AND GYNECOLOGICAL 
                   CARE.

       (a) General Rights.--
       (1) Direct access.--A group health plan, and a health 
     insurance issuer offering health insurance coverage, 
     described in subsection (b) may not require authorization or 
     referral by the plan, issuer, or any person (including a 
     primary care provider described in subsection (b)(2)) in the 
     case of a female participant, beneficiary, or enrollee who 
     seeks coverage for obstetrical or gynecological care provided 
     by a participating health care professional who specializes 
     in obstetrics or gynecology.
       (2) Obstetrical and gynecological care.--A group health 
     plan and a health insurance issuer described in subsection 
     (b) shall treat the provision of obstetrical and 
     gynecological care, and the ordering of related obstetrical 
     and gynecological items and services, pursuant to the direct 
     access described under paragraph (1), by a participating 
     health care professional who specializes in obstetrics or 
     gynecology as the authorization of the primary care provider.
       (b) Application of Section.--A group health plan, or health 
     insurance issuer offering health insurance coverage, 
     described in this subsection is a group health plan or 
     coverage that--
       (1) provides coverage for obstetric or gynecologic care; 
     and
       (2) requires the designation by a participant, beneficiary, 
     or enrollee of a participating primary care provider.
       (c) Construction.--Nothing in subsection (a) shall be 
     construed to--
       (1) waive any exclusions of coverage under the terms and 
     conditions of the plan or health insurance coverage with 
     respect to coverage of obstetrical or gynecological care; or
       (2) preclude the group health plan or health insurance 
     issuer involved from requiring that the obstetrical or 
     gynecological provider notify the primary care health care 
     professional or the plan or issuer of treatment decisions.

     SEC. 116. ACCESS TO PEDIATRIC CARE.

       (a) Pediatric Care.--In the case of a person who has a 
     child who is a participant, beneficiary, or enrollee under a 
     group health plan, or health insurance coverage offered by a 
     health insurance issuer, if the plan or issuer requires or 
     provides for the designation of a participating primary care 
     provider for the child, the plan or issuer shall permit such 
     person to designate a physician (allopathic or osteopathic) 
     who specializes in pediatrics as the child's primary care 
     provider if such provider participates in the network of the 
     plan or issuer.
       (b) Construction.--Nothing in subsection (a) shall be 
     construed to waive any exclusions of coverage under the terms 
     and conditions of the plan or health insurance coverage with 
     respect to coverage of pediatric care.

     SEC. 117. CONTINUITY OF CARE.

       (a) Termination of Provider.--
       (1) In general.--If--
       (A) a contract between a group health plan, or a health 
     insurance issuer offering health insurance coverage, and a 
     treating health care provider is terminated (as defined in 
     paragraph (e)(4)), or
       (B) benefits or coverage provided by a health care provider 
     are terminated because

[[Page 9524]]

     of a change in the terms of provider participation in such 
     plan or coverage,

     the plan or issuer shall meet the requirements of paragraph 
     (3) with respect to each continuing care patient.
       (2) Treatment of termination of contract with health 
     insurance issuer.--If a contract for the provision of health 
     insurance coverage between a group health plan and a health 
     insurance issuer is terminated and, as a result of such 
     termination, coverage of services of a health care provider 
     is terminated with respect to an individual, the provisions 
     of paragraph (1) (and the succeeding provisions of this 
     section) shall apply under the plan in the same manner as if 
     there had been a contract between the plan and the provider 
     that had been terminated, but only with respect to benefits 
     that are covered under the plan after the contract 
     termination.
       (3) Requirements.--The requirements of this paragraph are 
     that the plan or issuer--
       (A) notify the continuing care patient involved, or arrange 
     to have the patient notified pursuant to subsection (d)(2), 
     on a timely basis of the termination described in paragraph 
     (1) (or paragraph (2), if applicable) and the right to elect 
     continued transitional care from the provider under this 
     section;
       (B) provide the patient with an opportunity to notify the 
     plan or issuer of the patient's need for transitional care; 
     and
       (C) subject to subsection (c), permit the patient to elect 
     to continue to be covered with respect to the course of 
     treatment by such provider with the provider's consent during 
     a transitional period (as provided for under subsection (b)).
       (4) Continuing care patient.--For purposes of this section, 
     the term ``continuing care patient'' means a participant, 
     beneficiary, or enrollee who--
       (A) is undergoing a course of treatment for a serious and 
     complex condition from the provider at the time the plan or 
     issuer receives or provides notice of provider, benefit, or 
     coverage termination described in paragraph (1) (or paragraph 
     (2), if applicable);
       (B) is undergoing a course of institutional or inpatient 
     care from the provider at the time of such notice;
       (C) is scheduled to undergo non-elective surgery from the 
     provider at the time of such notice;
       (D) is pregnant and undergoing a course of treatment for 
     the pregnancy from the provider at the time of such notice; 
     or
       (E) is or was determined to be terminally ill (as 
     determined under section 1861(dd)(3)(A) of the Social 
     Security Act) at the time of such notice, but only with 
     respect to a provider that was treating the terminal illness 
     before the date of such notice.
       (b) Transitional Periods.--
       (1) Serious and complex conditions.--The transitional 
     period under this subsection with respect to a continuing 
     care patient described in subsection (a)(4)(A) shall extend 
     for up to 90 days (as determined by the treating health care 
     professional) from the date of the notice described in 
     subsection (a)(3)(A).
       (2) Institutional or inpatient care.--The transitional 
     period under this subsection for a continuing care patient 
     described in subsection (a)(4)(B) shall extend until the 
     earlier of--
       (A) the expiration of the 90-day period beginning on the 
     date on which the notice under subsection (a)(3)(A) is 
     provided; or
       (B) the date of discharge of the patient from such care or 
     the termination of the period of institutionalization, or, if 
     later, the date of completion of reasonable follow-up care.
       (3) Scheduled non-elective surgery.--The transitional 
     period under this subsection for a continuing care patient 
     described in subsection (a)(4)(C) shall extend until the 
     completion of the surgery involved and post-surgical follow-
     up care relating to the surgery and occurring within 90 days 
     after the date of the surgery.
       (4) Pregnancy.--The transitional period under this 
     subsection for a continuing care patient described in 
     subsection (a)(4)(D) shall extend through the provision of 
     post-partum care directly related to the delivery.
       (5) Terminal illness.--The transitional period under this 
     subsection for a continuing care patient described in 
     subsection (a)(4)(E) shall extend for the remainder of the 
     patient's life for care that is directly related to the 
     treatment of the terminal illness or its medical 
     manifestations.
       (c) Permissible Terms and Conditions.--A group health plan 
     or health insurance issuer may condition coverage of 
     continued treatment by a provider under this section upon the 
     provider agreeing to the following terms and conditions:
       (1) The treating health care provider agrees to accept 
     reimbursement from the plan or issuer and continuing care 
     patient involved (with respect to cost-sharing) at the rates 
     applicable prior to the start of the transitional period as 
     payment in full (or, in the case described in subsection 
     (a)(2), at the rates applicable under the replacement plan or 
     coverage after the date of the termination of the contract 
     with the group health plan or health insurance issuer) and 
     not to impose cost-sharing with respect to the patient in an 
     amount that would exceed the cost-sharing that could have 
     been imposed if the contract referred to in subsection (a)(1) 
     had not been terminated.
       (2) The treating health care provider agrees to adhere to 
     the quality assurance standards of the plan or issuer 
     responsible for payment under paragraph (1) and to provide to 
     such plan or issuer necessary medical information related to 
     the care provided.
       (3) The treating health care provider agrees otherwise to 
     adhere to such plan's or issuer's policies and procedures, 
     including procedures regarding referrals and obtaining prior 
     authorization and providing services pursuant to a treatment 
     plan (if any) approved by the plan or issuer.
       (d) Rules of Construction.--Nothing in this section shall 
     be construed--
       (1) to require the coverage of benefits which would not 
     have been covered if the provider involved remained a 
     participating provider; or
       (2) with respect to the termination of a contract under 
     subsection (a) to prevent a group health plan or health 
     insurance issuer from requiring that the health care 
     provider--
       (A) notify participants, beneficiaries, or enrollees of 
     their rights under this section; or
       (B) provide the plan or issuer with the name of each 
     participant, beneficiary, or enrollee who the provider 
     believes is a continuing care patient.
       (e) Definitions.--In this section:
       (1) Contract.--The term ``contract'' includes, with respect 
     to a plan or issuer and a treating health care provider, a 
     contract between such plan or issuer and an organized network 
     of providers that includes the treating health care provider, 
     and (in the case of such a contract) the contract between the 
     treating health care provider and the organized network.
       (2) Health care provider.--The term ``health care 
     provider'' or ``provider'' means--
       (A) any individual who is engaged in the delivery of health 
     care services in a State and who is required by State law or 
     regulation to be licensed or certified by the State to engage 
     in the delivery of such services in the State; and
       (B) any entity that is engaged in the delivery of health 
     care services in a State and that, if it is required by State 
     law or regulation to be licensed or certified by the State to 
     engage in the delivery of such services in the State, is so 
     licensed.
       (3) Serious and complex condition.--The term ``serious and 
     complex condition'' means, with respect to a participant, 
     beneficiary, or enrollee under the plan or coverage--
       (A) in the case of an acute illness, a condition that is 
     serious enough to require specialized medical treatment to 
     avoid the reasonable possibility of death or permanent harm; 
     or
       (B) in the case of a chronic illness or condition, is an 
     ongoing special condition (as defined in section 
     114(b)(2)(B)).
       (4) Terminated.--The term ``terminated'' includes, with 
     respect to a contract, the expiration or nonrenewal of the 
     contract, but does not include a termination of the contract 
     for failure to meet applicable quality standards or for 
     fraud.

     SEC. 118. ACCESS TO NEEDED PRESCRIPTION DRUGS.

       (a) In General.--To the extent that a group health plan, or 
     health insurance coverage offered by a health insurance 
     issuer, provides coverage for benefits with respect to 
     prescription drugs, and limits such coverage to drugs 
     included in a formulary, the plan or issuer shall--
       (1) ensure the participation of physicians and pharmacists 
     in developing and reviewing such formulary;
       (2) provide for disclosure of the formulary to providers; 
     and
       (3) in accordance with the applicable quality assurance and 
     utilization review standards of the plan or issuer, provide 
     for exceptions from the formulary limitation when a non-
     formulary alternative is medically necessary and appropriate 
     and, in the case of such an exception, apply the same cost-
     sharing requirements that would have applied in the case of a 
     drug covered under the formulary.
       (b) Coverage of Approved Drugs and Medical Devices.--
       (1) In general.--A group health plan (and health insurance 
     coverage offered in connection with such a plan) that 
     provides any coverage of prescription drugs or medical 
     devices shall not deny coverage of such a drug or device on 
     the basis that the use is investigational, if the use--
       (A) in the case of a prescription drug--
       (i) is included in the labeling authorized by the 
     application in effect for the drug pursuant to subsection (b) 
     or (j) of section 505 of the Federal Food, Drug, and Cosmetic 
     Act, without regard to any postmarketing requirements that 
     may apply under such Act; or
       (ii) is included in the labeling authorized by the 
     application in effect for the drug under section 351 of the 
     Public Health Service Act, without regard to any 
     postmarketing requirements that may apply pursuant to such 
     section; or
       (B) in the case of a medical device, is included in the 
     labeling authorized by a regulation under subsection (d) or 
     (3) of section

[[Page 9525]]

     513 of the Federal Food, Drug, and Cosmetic Act, an order 
     under subsection (f) of such section, or an application 
     approved under section 515 of such Act, without regard to any 
     postmarketing requirements that may apply under such Act.
       (2) Construction.--Nothing in this subsection shall be 
     construed as requiring a group health plan (or health 
     insurance coverage offered in connection with such a plan) to 
     provide any coverage of prescription drugs or medical 
     devices.

     SEC. 119. COVERAGE FOR INDIVIDUALS PARTICIPATING IN APPROVED 
                   CLINICAL TRIALS.

       (a) Coverage.--
       (1) In general.--If a group health plan, or health 
     insurance issuer that is providing health insurance coverage, 
     provides coverage to a qualified individual (as defined in 
     subsection (b)), the plan or issuer--
       (A) may not deny the individual participation in the 
     clinical trial referred to in subsection (b)(2);
       (B) subject to subsection (c), may not deny (or limit or 
     impose additional conditions on) the coverage of routine 
     patient costs for items and services furnished in connection 
     with participation in the trial; and
       (C) may not discriminate against the individual on the 
     basis of the enrollee's participation in such trial.
       (2) Exclusion of certain costs.--For purposes of paragraph 
     (1)(B), routine patient costs do not include the cost of the 
     tests or measurements conducted primarily for the purpose of 
     the clinical trial involved.
       (3) Use of in-network providers.--If one or more 
     participating providers is participating in a clinical trial, 
     nothing in paragraph (1) shall be construed as preventing a 
     plan or issuer from requiring that a qualified individual 
     participate in the trial through such a participating 
     provider if the provider will accept the individual as a 
     participant in the trial.
       (b) Qualified Individual Defined.--For purposes of 
     subsection (a), the term ``qualified individual'' means an 
     individual who is a participant or beneficiary in a group 
     health plan, or who is an enrollee under health insurance 
     coverage, and who meets the following conditions:
       (1)(A) The individual has a life-threatening or serious 
     illness for which no standard treatment is effective.
       (B) The individual is eligible to participate in an 
     approved clinical trial according to the trial protocol with 
     respect to treatment of such illness.
       (C) The individual's participation in the trial offers 
     meaningful potential for significant clinical benefit for the 
     individual.
       (2) Either--
       (A) the referring physician is a participating health care 
     professional and has concluded that the individual's 
     participation in such trial would be appropriate based upon 
     the individual meeting the conditions described in paragraph 
     (1); or
       (B) the participant, beneficiary, or enrollee provides 
     medical and scientific information establishing that the 
     individual's participation in such trial would be appropriate 
     based upon the individual meeting the conditions described in 
     paragraph (1).
       (c) Payment.--
       (1) In general.--Under this section a group health plan and 
     a health insurance issuer shall provide for payment for 
     routine patient costs described in subsection (a)(2) but is 
     not required to pay for costs of items and services that are 
     reasonably expected (as determined by the appropriate 
     Secretary) to be paid for by the sponsors of an approved 
     clinical trial.
       (2) Payment rate.--In the case of covered items and 
     services provided by--
       (A) a participating provider, the payment rate shall be at 
     the agreed upon rate; or
       (B) a nonparticipating provider, the payment rate shall be 
     at the rate the plan or issuer would normally pay for 
     comparable services under subparagraph (A).
       (d) Approved Clinical Trial Defined.--
       (1) In general.--In this section, the term ``approved 
     clinical trial'' means a clinical research study or clinical 
     investigation--
       (A) approved and funded (which may include funding through 
     in-kind contributions) by one or more of the following:
       (i) the National Institutes of Health;
       (ii) a cooperative group or center of the National 
     Institutes of Health, including a qualified nongovernmental 
     research entity to which the National Cancer Institute has 
     awarded a center support grant;
       (iii) either of the following if the conditions described 
     in paragraph (2) are met--

       (I) the Department of Veterans Affairs;
       (II) the Department of Defense; or

       (B) approved by the Food and Drug Administration.
       (2) Conditions for departments.--The conditions described 
     in this paragraph, for a study or investigation conducted by 
     a Department, are that the study or investigation has been 
     reviewed and approved through a system of peer review that 
     the appropriate Secretary determines--
       (A) to be comparable to the system of peer review of 
     studies and investigations used by the National Institutes of 
     Health; and
       (B) assures unbiased review of the highest ethical 
     standards by qualified individuals who have no interest in 
     the outcome of the review.
       (e) Construction.--Nothing in this section shall be 
     construed to limit a plan's or issuer's coverage with respect 
     to clinical trials.

     SEC. 120. REQUIRED COVERAGE FOR MINIMUM HOSPITAL STAY FOR 
                   MASTECTO-
                   MIES AND LYMPH NODE DISSECTIONS FOR THE 
                   TREATMENT OF BREAST CANCER AND COVERAGE FOR 
                   SECONDARY CONSULTATIONS.

       (a) Inpatient Care.--
       (1) In general.--A group health plan, and a health 
     insurance issuer providing health insurance coverage, that 
     provides medical and surgical benefits shall ensure that 
     inpatient coverage with respect to the treatment of breast 
     cancer is provided for a period of time as is determined by 
     the attending physician, in consultation with the patient, to 
     be medically necessary and appropriate following--
       (A) a mastectomy;
       (B) a lumpectomy; or
       (C) a lymph node dissection for the treatment of breast 
     cancer.
       (2) Exception.--Nothing in this section shall be construed 
     as requiring the provision of inpatient coverage if the 
     attending physician and patient determine that a shorter 
     period of hospital stay is medically appropriate.
       (b) Prohibition on Certain Modifications.--In implementing 
     the requirements of this section, a group health plan, and a 
     health insurance issuer providing health insurance coverage, 
     may not modify the terms and conditions of coverage based on 
     the determination by a participant, beneficiary, or enrollee 
     to request less than the minimum coverage required under 
     subsection (a).
       (c) Secondary Consultations.--
       (1) In general.--A group health plan, and a health 
     insurance issuer providing health insurance coverage, that 
     provides coverage with respect to medical and surgical 
     services provided in relation to the diagnosis and treatment 
     of cancer shall ensure that full coverage is provided for 
     secondary consultations by specialists in the appropriate 
     medical fields (including pathology, radiology, and oncology) 
     to confirm or refute such diagnosis. Such plan or issuer 
     shall ensure that full coverage is provided for such 
     secondary consultation whether such consultation is based on 
     a positive or negative initial diagnosis. In any case in 
     which the attending physician certifies in writing that 
     services necessary for such a secondary consultation are not 
     sufficiently available from specialists operating under the 
     plan or coverage with respect to whose services coverage is 
     otherwise provided under such plan or by such issuer, such 
     plan or issuer shall ensure that coverage is provided with 
     respect to the services necessary for the secondary 
     consultation with any other specialist selected by the 
     attending physician for such purpose at no additional cost to 
     the individual beyond that which the individual would have 
     paid if the specialist was participating in the network of 
     the plan or issuer.
       (2) Exception.--Nothing in paragraph (1) shall be construed 
     as requiring the provision of secondary consultations where 
     the patient determines not to seek such a consultation.
       (d) Prohibition on Penalties or Incentives.--A group health 
     plan, and a health insurance issuer providing health 
     insurance coverage, may not--
       (1) penalize or otherwise reduce or limit the reimbursement 
     of a provider or specialist because the provider or 
     specialist provided care to a participant, beneficiary, or 
     enrollee in accordance with this section;
       (2) provide financial or other incentives to a physician or 
     specialist to induce the physician or specialist to keep the 
     length of inpatient stays of patients following a mastectomy, 
     lumpectomy, or a lymph node dissection for the treatment of 
     breast cancer below certain limits or to limit referrals for 
     secondary consultations; or
       (3) provide financial or other incentives to a physician or 
     specialist to induce the physician or specialist to refrain 
     from referring a participant, beneficiary, or enrollee for a 
     secondary consultation that would otherwise be covered by the 
     plan or coverage involved under subsection (c).

                   Subtitle C--Access to Information

     SEC. 121. PATIENT ACCESS TO INFORMATION.

       (a) Requirement.--
       (1) Disclosure.--
       (A) In general.--A group health plan, and a health 
     insurance issuer that provides coverage in connection with 
     health insurance coverage, shall provide for the disclosure 
     to participants, beneficiaries, and enrollees--
       (i) of the information described in subsection (b) at the 
     time of the initial enrollment of the participant, 
     beneficiary, or enrollee under the plan or coverage;
       (ii) of such information on an annual basis--

       (I) in conjunction with the election period of the plan or 
     coverage if the plan or coverage has such an election period; 
     or
       (II) in the case of a plan or coverage that does not have 
     an election period, in conjunction with the beginning of the 
     plan or coverage year; and

       (iii) of information relating to any material reduction to 
     the benefits or information described in such subsection or 
     subsection (c), in the form of a notice provided not later 
     than 30 days before the date on which the reduction takes 
     effect.

[[Page 9526]]

       (B) Participants, beneficiaries, and enrollees.--The 
     disclosure required under subparagraph (A) shall be 
     provided--
       (i) jointly to each participant, beneficiary, and enrollee 
     who reside at the same address; or
       (ii) in the case of a beneficiary or enrollee who does not 
     reside at the same address as the participant or another 
     enrollee, separately to the participant or other enrollees 
     and such beneficiary or enrollee.
       (2) Provision of information.--Information shall be 
     provided to participants, beneficiaries, and enrollees under 
     this section at the last known address maintained by the plan 
     or issuer with respect to such participants, beneficiaries, 
     or enrollees, to the extent that such information is provided 
     to participants, beneficiaries, or enrollees via the United 
     States Postal Service or other private delivery service.
       (b) Required Information.--The informational materials to 
     be distributed under this section shall include for each 
     option available under the group health plan or health 
     insurance coverage the following:
       (1) Benefits.--A description of the covered benefits, 
     including--
       (A) any in- and out-of-network benefits;
       (B) specific preventive services covered under the plan or 
     coverage if such services are covered;
       (C) any specific exclusions or express limitations of 
     benefits described in section 104(d)(3)(C);
       (D) any other benefit limitations, including any annual or 
     lifetime benefit limits and any monetary limits or limits on 
     the number of visits, days, or services, and any specific 
     coverage exclusions; and
       (E) any definition of medical necessity used in making 
     coverage determinations by the plan, issuer, or claims 
     administrator.
       (2) Cost sharing.--A description of any cost-sharing 
     requirements, including--
       (A) any premiums, deductibles, coinsurance, copayment 
     amounts, and liability for balance billing, for which the 
     participant, beneficiary, or enrollee will be responsible 
     under each option available under the plan;
       (B) any maximum out-of-pocket expense for which the 
     participant, beneficiary, or enrollee may be liable;
       (C) any cost-sharing requirements for out-of-network 
     benefits or services received from nonparticipating 
     providers; and
       (D) any additional cost-sharing or charges for benefits and 
     services that are furnished without meeting applicable plan 
     or coverage requirements, such as prior authorization or 
     precertification.
       (3) Disenrollment.--Information relating to the 
     disenrollment of a participant, beneficiary, or enrollee.
       (4) Service area.--A description of the plan or issuer's 
     service area, including the provision of any out-of-area 
     coverage.
       (5) Participating providers.--A directory of participating 
     providers (to the extent a plan or issuer provides coverage 
     through a network of providers) that includes, at a minimum, 
     the name, address, and telephone number of each participating 
     provider, and information about how to inquire whether a 
     participating provider is currently accepting new patients.
       (6) Choice of primary care provider.--A description of any 
     requirements and procedures to be used by participants, 
     beneficiaries, and enrollees in selecting, accessing, or 
     changing their primary care provider, including providers 
     both within and outside of the network (if the plan or issuer 
     permits out-of-network services), and the right to select a 
     pediatrician as a primary care provider under section 116 for 
     a participant, beneficiary, or enrollee who is a child if 
     such section applies.
       (7) Preauthorization requirements.--A description of the 
     requirements and procedures to be used to obtain 
     preauthorization for health services, if such 
     preauthorization is required.
       (8) Experimental and investigational treatments.--A 
     description of the process for determining whether a 
     particular item, service, or treatment is considered 
     experimental or investigational, and the circumstances under 
     which such treatments are covered by the plan or issuer.
       (9) Specialty care.--A description of the requirements and 
     procedures to be used by participants, beneficiaries, and 
     enrollees in accessing specialty care and obtaining referrals 
     to participating and nonparticipating specialists, including 
     any limitations on choice of health care professionals 
     referred to in section 112(b)(2) and the right to timely 
     access to specialists care under section 114 if such section 
     applies.
       (10) Clinical trials.--A description of the circumstances 
     and conditions under which participation in clinical trials 
     is covered under the terms and conditions of the plan or 
     coverage, and the right to obtain coverage for approved 
     clinical trials under section 119 if such section applies.
       (11) Prescription drugs.--To the extent the plan or issuer 
     provides coverage for prescription drugs, a statement of 
     whether such coverage is limited to drugs included in a 
     formulary, a description of any provisions and cost-sharing 
     required for obtaining on- and off-formulary medications, and 
     a description of the rights of participants, beneficiaries, 
     and enrollees in obtaining access to access to prescription 
     drugs under section 118 if such section applies.
       (12) Emergency services.--A summary of the rules and 
     procedures for accessing emergency services, including the 
     right of a participant, beneficiary, or enrollee to obtain 
     emergency services under the prudent layperson standard under 
     section 113, if such section applies, and any educational 
     information that the plan or issuer may provide regarding the 
     appropriate use of emergency services.
       (13) Claims and appeals.--A description of the plan or 
     issuer's rules and procedures pertaining to claims and 
     appeals, a description of the rights (including deadlines for 
     exercising rights) of participants, beneficiaries, and 
     enrollees under subtitle A in obtaining covered benefits, 
     filing a claim for benefits, and appealing coverage decisions 
     internally and externally (including telephone numbers and 
     mailing addresses of the appropriate authority), and a 
     description of any additional legal rights and remedies 
     available under section 502 of the Employee Retirement Income 
     Security Act of 1974 and applicable State law.
       (14) Advance directives and organ donation.--A description 
     of procedures for advance directives and organ donation 
     decisions if the plan or issuer maintains such procedures.
       (15) Information on plans and issuers.--The name, mailing 
     address, and telephone number or numbers of the plan 
     administrator and the issuer to be used by participants, 
     beneficiaries, and enrollees seeking information about plan 
     or coverage benefits and services, payment of a claim, or 
     authorization for services and treatment. Notice of whether 
     the benefits under the plan or coverage are provided under a 
     contract or policy of insurance issued by an issuer, or 
     whether benefits are provided directly by the plan sponsor 
     who bears the insurance risk.
       (16) Translation services.--A summary description of any 
     translation or interpretation services (including the 
     availability of printed information in languages other than 
     English, audio tapes, or information in Braille) that are 
     available for non-English speakers and participants, 
     beneficiaries, and enrollees with communication disabilities 
     and a description of how to access these items or services.
       (17) Accreditation information.--Any information that is 
     made public by accrediting organizations in the process of 
     accreditation if the plan or issuer is accredited, or any 
     additional quality indicators (such as the results of 
     enrollee satisfaction surveys) that the plan or issuer makes 
     public or makes available to participants, beneficiaries, and 
     enrollees.
       (18) Notice of requirements.--A description of any rights 
     of participants, beneficiaries, and enrollees that are 
     established by the Patients' Bill of Rights Act of 2005 
     (excluding those described in paragraphs (1) through (17)) if 
     such sections apply. The description required under this 
     paragraph may be combined with the notices of the type 
     described in sections 711(d), 713(b), or 606(a)(1) of the 
     Employee Retirement Income Security Act of 1974 and with any 
     other notice provision that the appropriate Secretary 
     determines may be combined, so long as such combination does 
     not result in any reduction in the information that would 
     otherwise be provided to the recipient.
       (19) Availability of additional information.--A statement 
     that the information described in subsection (c), and 
     instructions on obtaining such information (including 
     telephone numbers and, if available, Internet websites), 
     shall be made available upon request.
       (20) Designated decisionmakers.--A description of the 
     participants and beneficiaries with respect to whom each 
     designated decisionmaker under the plan has assumed liability 
     under section 502(o) of the Employee Retirement Income 
     Security Act of 1974 and the name and address of each such 
     decisionmaker.
       (c) Additional Information.--The informational materials to 
     be provided upon the request of a participant, beneficiary, 
     or enrollee shall include for each option available under a 
     group health plan or health insurance coverage the following:
       (1) Status of providers.--The State licensure status of the 
     plan or issuer's participating health care professionals and 
     participating health care facilities, and, if available, the 
     education, training, specialty qualifications or 
     certifications of such professionals.
       (2) Compensation methods.--A summary description by 
     category of the applicable methods (such as capitation, fee-
     for-service, salary, bundled payments, per diem, or a 
     combination thereof) used for compensating prospective or 
     treating health care professionals (including primary care 
     providers and specialists) and facilities in connection with 
     the provision of health care under the plan or coverage.
       (3) Prescription drugs.--Information about whether a 
     specific prescription medication is included in the formulary 
     of the plan or issuer, if the plan or issuer uses a defined 
     formulary.
       (4) Utilization review activities.--A description of 
     procedures used and requirements (including circumstances, 
     timeframes,

[[Page 9527]]

     and appeals rights) under any utilization review program 
     under sections 101 and 102, including any drug formulary 
     program under section 118.
       (5) External appeals information.--Aggregate information on 
     the number and outcomes of external medical reviews, relative 
     to the sample size (such as the number of covered lives) 
     under the plan or under the coverage of the issuer.
       (d) Manner of Disclosure.--The information described in 
     this section shall be disclosed in an accessible medium and 
     format that is calculated to be understood by a participant 
     or enrollee.
       (e) Rules of Construction.--Nothing in this section shall 
     be construed to prohibit a group health plan, or a health 
     insurance issuer in connection with health insurance 
     coverage, from--
       (1) distributing any other additional information 
     determined by the plan or issuer to be important or necessary 
     in assisting participants, beneficiaries, and enrollees in 
     the selection of a health plan or health insurance coverage; 
     and
       (2) complying with the provisions of this section by 
     providing information in brochures, through the Internet or 
     other electronic media, or through other similar means, so 
     long as--
       (A) the disclosure of such information in such form is in 
     accordance with requirements as the appropriate Secretary may 
     impose, and
       (B) in connection with any such disclosure of information 
     through the Internet or other electronic media--
       (i) the recipient has affirmatively consented to the 
     disclosure of such information in such form,
       (ii) the recipient is capable of accessing the information 
     so disclosed on the recipient's individual workstation or at 
     the recipient's home,
       (iii) the recipient retains an ongoing right to receive 
     paper disclosure of such information and receives, in advance 
     of any attempt at disclosure of such information to him or 
     her through the Internet or other electronic media, notice in 
     printed form of such ongoing right and of the proper software 
     required to view information so disclosed, and
       (iv) the plan administrator appropriately ensures that the 
     intended recipient is receiving the information so disclosed 
     and provides the information in printed form if the 
     information is not received.

         Subtitle D--Protecting the Doctor-patient Relationship

     SEC. 131. PROHIBITION OF INTERFERENCE WITH CERTAIN MEDICAL 
                   COMMUNICATIONS.

       (a) General Rule.--The provisions of any contract or 
     agreement, or the operation of any contract or agreement, 
     between a group health plan or health insurance issuer in 
     relation to health insurance coverage (including any 
     partnership, association, or other organization that enters 
     into or administers such a contract or agreement) and a 
     health care provider (or group of health care providers) 
     shall not prohibit or otherwise restrict a health care 
     professional from advising such a participant, beneficiary, 
     or enrollee who is a patient of the professional about the 
     health status of the individual or medical care or treatment 
     for the individual's condition or disease, regardless of 
     whether benefits for such care or treatment are provided 
     under the plan or coverage, if the professional is acting 
     within the lawful scope of practice.
       (b) Nullification.--Any contract provision or agreement 
     that restricts or prohibits medical communications in 
     violation of subsection (a) shall be null and void.

     SEC. 132. PROHIBITION OF DISCRIMINATION AGAINST PROVIDERS 
                   BASED ON LICENSURE.

       (a) In General.--A group health plan, and a health 
     insurance issuer with respect to health insurance coverage, 
     shall not discriminate with respect to participation or 
     indemnification as to any provider who is acting within the 
     scope of the provider's license or certification under 
     applicable State law, solely on the basis of such license or 
     certification.
       (b) Construction.--Subsection (a) shall not be construed--
       (1) as requiring the coverage under a group health plan or 
     health insurance coverage of a particular benefit or service 
     or to prohibit a plan or issuer from including providers only 
     to the extent necessary to meet the needs of the plan's or 
     issuer's participants, beneficiaries, or enrollees or from 
     establishing any measure designed to maintain quality and 
     control costs consistent with the responsibilities of the 
     plan or issuer;
       (2) to override any State licensure or scope-of-practice 
     law; or
       (3) as requiring a plan or issuer that offers network 
     coverage to include for participation every willing provider 
     who meets the terms and conditions of the plan or issuer.

     SEC. 133. PROHIBITION AGAINST IMPROPER INCENTIVE 
                   ARRANGEMENTS.

       (a) In General.--A group health plan and a health insurance 
     issuer offering health insurance coverage may not operate any 
     physician incentive plan (as defined in subparagraph (B) of 
     section 1852(j)(4) of the Social Security Act) unless the 
     requirements described in clauses (i), (ii)(I), and (iii) of 
     subparagraph (A) of such section are met with respect to such 
     a plan.
       (b) Application.--For purposes of carrying out paragraph 
     (1), any reference in section 1852(j)(4) of the Social 
     Security Act to the Secretary, a MedicareAdvantage 
     organization, or an individual enrolled with the organization 
     shall be treated as a reference to the applicable authority, 
     a group health plan or health insurance issuer, respectively, 
     and a participant, beneficiary, or enrollee with the plan or 
     organization, respectively.
       (c) Construction.--Nothing in this section shall be 
     construed as prohibiting all capitation and similar 
     arrangements or all provider discount arrangements.

     SEC. 134. PAYMENT OF CLAIMS.

       A group health plan, and a health insurance issuer offering 
     health insurance coverage, shall provide for prompt payment 
     of claims submitted for health care services or supplies 
     furnished to a participant, beneficiary, or enrollee with 
     respect to benefits covered by the plan or issuer, in a 
     manner that is no less protective than the provisions of 
     section 1842(c)(2) of the Social Security Act (42 U.S.C. 
     1395u(c)(2)).

     SEC. 135. PROTECTION FOR PATIENT ADVOCACY.

       (a) Protection for Use of Utilization Review and Grievance 
     Process.--A group health plan, and a health insurance issuer 
     with respect to the provision of health insurance coverage, 
     may not retaliate against a participant, beneficiary, 
     enrollee, or health care provider based on the participant's, 
     beneficiary's, enrollee's or provider's use of, or 
     participation in, a utilization review process or a grievance 
     process of the plan or issuer (including an internal or 
     external review or appeal process) under this title.
       (b) Protection for Quality Advocacy by Health Care 
     Professionals.--
       (1) In general.--A group health plan and a health insurance 
     issuer may not retaliate or discriminate against a protected 
     health care professional because the professional in good 
     faith--
       (A) discloses information relating to the care, services, 
     or conditions affecting one or more participants, 
     beneficiaries, or enrollees of the plan or issuer to an 
     appropriate public regulatory agency, an appropriate private 
     accreditation body, or appropriate management personnel of 
     the plan or issuer; or
       (B) initiates, cooperates, or otherwise participates in an 
     investigation or proceeding by such an agency with respect to 
     such care, services, or conditions.

     If an institutional health care provider is a participating 
     provider with such a plan or issuer or otherwise receives 
     payments for benefits provided by such a plan or issuer, the 
     provisions of the previous sentence shall apply to the 
     provider in relation to care, services, or conditions 
     affecting one or more patients within an institutional health 
     care provider in the same manner as they apply to the plan or 
     issuer in relation to care, services, or conditions provided 
     to one or more participants, beneficiaries, or enrollees; and 
     for purposes of applying this sentence, any reference to a 
     plan or issuer is deemed a reference to the institutional 
     health care provider.
       (2) Good faith action.--For purposes of paragraph (1), a 
     protected health care professional is considered to be acting 
     in good faith with respect to disclosure of information or 
     participation if, with respect to the information disclosed 
     as part of the action--
       (A) the disclosure is made on the basis of personal 
     knowledge and is consistent with that degree of learning and 
     skill ordinarily possessed by health care professionals with 
     the same licensure or certification and the same experience;
       (B) the professional reasonably believes the information to 
     be true;
       (C) the information evidences either a violation of a law, 
     rule, or regulation, of an applicable accreditation standard, 
     or of a generally recognized professional or clinical 
     standard or that a patient is in imminent hazard of loss of 
     life or serious injury; and
       (D) subject to subparagraphs (B) and (C) of paragraph (3), 
     the professional has followed reasonable internal procedures 
     of the plan, issuer, or institutional health care provider 
     established for the purpose of addressing quality concerns 
     before making the disclosure.
       (3) Exception and special rule.--
       (A) General exception.--Paragraph (1) does not protect 
     disclosures that would violate Federal or State law or 
     diminish or impair the rights of any person to the continued 
     protection of confidentiality of communications provided by 
     such law.
       (B) Notice of internal procedures.--Subparagraph (D) of 
     paragraph (2) shall not apply unless the internal procedures 
     involved are reasonably expected to be known to the health 
     care professional involved. For purposes of this 
     subparagraph, a health care professional is reasonably 
     expected to know of internal procedures if those procedures 
     have been made available to the professional through 
     distribution or posting.
       (C) Internal procedure exception.--Subparagraph (D) of 
     paragraph (2) also shall not apply if--
       (i) the disclosure relates to an imminent hazard of loss of 
     life or serious injury to a patient;
       (ii) the disclosure is made to an appropriate private 
     accreditation body pursuant to disclosure procedures 
     established by the body; or

[[Page 9528]]

       (iii) the disclosure is in response to an inquiry made in 
     an investigation or proceeding of an appropriate public 
     regulatory agency and the information disclosed is limited to 
     the scope of the investigation or proceeding.
       (4) Additional considerations.--It shall not be a violation 
     of paragraph (1) to take an adverse action against a 
     protected health care professional if the plan, issuer, or 
     provider taking the adverse action involved demonstrates that 
     it would have taken the same adverse action even in the 
     absence of the activities protected under such paragraph.
       (5) Notice.--A group health plan, health insurance issuer, 
     and institutional health care provider shall post a notice, 
     to be provided or approved by the Secretary of Labor, setting 
     forth excerpts from, or summaries of, the pertinent 
     provisions of this subsection and information pertaining to 
     enforcement of such provisions.
       (6) Constructions.--
       (A) Determinations of coverage.--Nothing in this subsection 
     shall be construed to prohibit a plan or issuer from making a 
     determination not to pay for a particular medical treatment 
     or service or the services of a type of health care 
     professional.
       (B) Enforcement of peer review protocols and internal 
     procedures.--Nothing in this subsection shall be construed to 
     prohibit a plan, issuer, or provider from establishing and 
     enforcing reasonable peer review or utilization review 
     protocols or determining whether a protected health care 
     professional has complied with those protocols or from 
     establishing and enforcing internal procedures for the 
     purpose of addressing quality concerns.
       (C) Relation to other rights.--Nothing in this subsection 
     shall be construed to abridge rights of participants, 
     beneficiaries, enrollees, and protected health care 
     professionals under other applicable Federal or State laws.
       (7) Protected health care professional defined.--For 
     purposes of this subsection, the term ``protected health care 
     professional'' means an individual who is a licensed or 
     certified health care professional and who--
       (A) with respect to a group health plan or health insurance 
     issuer, is an employee of the plan or issuer or has a 
     contract with the plan or issuer for provision of services 
     for which benefits are available under the plan or issuer; or
       (B) with respect to an institutional health care provider, 
     is an employee of the provider or has a contract or other 
     arrangement with the provider respecting the provision of 
     health care services.

                        Subtitle E--Definitions

     SEC. 151. DEFINITIONS.

       (a) Incorporation of General Definitions.--Except as 
     otherwise provided, the provisions of section 2791 of the 
     Public Health Service Act shall apply for purposes of this 
     title in the same manner as they apply for purposes of title 
     XXVII of such Act.
       (b) Secretary.--Except as otherwise provided, the term 
     ``Secretary'' means the Secretary of Health and Human 
     Services, in consultation with the Secretary of Labor and the 
     term ``appropriate Secretary'' means the Secretary of Health 
     and Human Services in relation to carrying out this title 
     under sections 2706 and 2751 of the Public Health Service Act 
     and the Secretary of Labor in relation to carrying out this 
     title under section 714 of the Employee Retirement Income 
     Security Act of 1974.
       (c) Additional Definitions.--For purposes of this title:
       (1) Applicable authority.--The term ``applicable 
     authority'' means--
       (A) in the case of a group health plan, the Secretary of 
     Health and Human Services and the Secretary of Labor; and
       (B) in the case of a health insurance issuer with respect 
     to a specific provision of this title, the applicable State 
     authority (as defined in section 2791(d) of the Public Health 
     Service Act), or the Secretary of Health and Human Services, 
     if such Secretary is enforcing such provision under section 
     2722(a)(2) or 2761(a)(2) of the Public Health Service Act.
       (2) Enrollee.--The term ``enrollee'' means, with respect to 
     health insurance coverage offered by a health insurance 
     issuer, an individual enrolled with the issuer to receive 
     such coverage.
       (3) Group health plan.--The term ``group health plan'' has 
     the meaning given such term in section 733(a) of the Employee 
     Retirement Income Security Act of 1974, except that such term 
     includes a employee welfare benefit plan treated as a group 
     health plan under section 732(d) of such Act or defined as 
     such a plan under section 607(1) of such Act.
       (4) Health care professional.--The term ``health care 
     professional'' means an individual who is licensed, 
     accredited, or certified under State law to provide specified 
     health care services and who is operating within the scope of 
     such licensure, accreditation, or certification.
       (5) Health care provider.--The term ``health care 
     provider'' includes a physician or other health care 
     professional, as well as an institutional or other facility 
     or agency that provides health care services and that is 
     licensed, accredited, or certified to provide health care 
     items and services under applicable State law.
       (6) Network.--The term ``network'' means, with respect to a 
     group health plan or health insurance issuer offering health 
     insurance coverage, the participating health care 
     professionals and providers through whom the plan or issuer 
     provides health care items and services to participants, 
     beneficiaries, or enrollees.
       (7) Nonparticipating.--The term ``nonparticipating'' means, 
     with respect to a health care provider that provides health 
     care items and services to a participant, beneficiary, or 
     enrollee under group health plan or health insurance 
     coverage, a health care provider that is not a participating 
     health care provider with respect to such items and services.
       (8) Participating.--The term ``participating'' means, with 
     respect to a health care provider that provides health care 
     items and services to a participant, beneficiary, or enrollee 
     under group health plan or health insurance coverage offered 
     by a health insurance issuer, a health care provider that 
     furnishes such items and services under a contract or other 
     arrangement with the plan or issuer.
       (9) Prior authorization.--The term ``prior authorization'' 
     means the process of obtaining prior approval from a health 
     insurance issuer or group health plan for the provision or 
     coverage of medical services.
       (10) Terms and conditions.--The term ``terms and 
     conditions'' includes, with respect to a group health plan or 
     health insurance coverage, requirements imposed under this 
     title with respect to the plan or coverage.

     SEC. 152. PREEMPTION; STATE FLEXIBILITY; CONSTRUCTION.

       (a) Continued Applicability of State Law With Respect to 
     Health Insurance Issuers.--
       (1) In general.--Subject to paragraph (2), this title shall 
     not be construed to supersede any provision of State law 
     which establishes, implements, or continues in effect any 
     standard or requirement solely relating to health insurance 
     issuers (in connection with group health insurance coverage 
     or otherwise) except to the extent that such standard or 
     requirement prevents the application of a requirement of this 
     title.
       (2) Continued preemption with respect to group health 
     plans.--Nothing in this title shall be construed to affect or 
     modify the provisions of section 514 of the Employee 
     Retirement Income Security Act of 1974 with respect to group 
     health plans.
       (3) Construction.--In applying this section, a State law 
     that provides for equal access to, and availability of, all 
     categories of licensed health care providers and services 
     shall not be treated as preventing the application of any 
     requirement of this title.
       (b) Application of Substantially Compliant State Laws.--
       (1) In general.--In the case of a State law that imposes, 
     with respect to health insurance coverage offered by a health 
     insurance issuer and with respect to a group health plan that 
     is a non-Federal governmental plan, a requirement that 
     substantially complies (within the meaning of subsection (c)) 
     with a patient protection requirement (as defined in 
     paragraph (3)) and does not prevent the application of other 
     requirements under this Act (except in the case of other 
     substantially compliant requirements), in applying the 
     requirements of this title under section 2707 and 2753 (as 
     applicable) of the Public Health Service Act (as added by 
     title II), subject to subsection (a)(2)--
       (A) the State law shall not be treated as being superseded 
     under subsection (a); and
       (B) the State law shall apply instead of the patient 
     protection requirement otherwise applicable with respect to 
     health insurance coverage and non-Federal governmental plans.
       (2) Limitation.--In the case of a group health plan covered 
     under title I of the Employee Retirement Income Security Act 
     of 1974, paragraph (1) shall be construed to apply only with 
     respect to the health insurance coverage (if any) offered in 
     connection with the plan.
       (3) Definitions.--In this section:
       (A) Patient protection requirement.--The term ``patient 
     protection requirement'' means a requirement under this 
     title, and includes (as a single requirement) a group or 
     related set of requirements under a section or similar unit 
     under this title.
       (B) Substantially compliant.--The terms ``substantially 
     compliant'', substantially complies'', or ``substantial 
     compliance'' with respect to a State law, mean that the State 
     law has the same or similar features as the patient 
     protection requirements and has a similar effect.
       (c) Determinations of Substantial Compliance.--
       (1) Certification by states.--A State may submit to the 
     Secretary a certification that a State law provides for 
     patient protections that are at least substantially compliant 
     with one or more patient protection requirements. Such 
     certification shall be accompanied by such information as may 
     be required to permit the Secretary to make the determination 
     described in paragraph (2)(A).
       (2) Review.--
       (A) In general.--The Secretary shall promptly review a 
     certification submitted under paragraph (1) with respect to a 
     State law to determine if the State law substantially 
     complies with the patient protection

[[Page 9529]]

     requirement (or requirements) to which the law relates.
       (B) Approval deadlines.--
       (i) Initial review.--Such a certification is considered 
     approved unless the Secretary notifies the State in writing, 
     within 90 days after the date of receipt of the 
     certification, that the certification is disapproved (and the 
     reasons for disapproval) or that specified additional 
     information is needed to make the determination described in 
     subparagraph (A).
       (ii) Additional information.--With respect to a State that 
     has been notified by the Secretary under clause (i) that 
     specified additional information is needed to make the 
     determination described in subparagraph (A), the Secretary 
     shall make the determination within 60 days after the date on 
     which such specified additional information is received by 
     the Secretary.
       (3) Approval.--
       (A) In general.--The Secretary shall approve a 
     certification under paragraph (1) unless--
       (i) the State fails to provide sufficient information to 
     enable the Secretary to make a determination under paragraph 
     (2)(A); or
       (ii) the Secretary determines that the State law involved 
     does not provide for patient protections that substantially 
     comply with the patient protection requirement (or 
     requirements) to which the law relates.
       (B) State challenge.--A State that has a certification 
     disapproved by the Secretary under subparagraph (A) may 
     challenge such disapproval in the appropriate United States 
     district court.
       (C) Deference to states.--With respect to a certification 
     submitted under paragraph (1), the Secretary shall give 
     deference to the State's interpretation of the State law 
     involved with respect to the patient protection involved.
       (D) Public notification.--The Secretary shall--
       (i) provide a State with a notice of the determination to 
     approve or disapprove a certification under this paragraph;
       (ii) promptly publish in the Federal Register a notice that 
     a State has submitted a certification under paragraph (1);
       (iii) promptly publish in the Federal Register the notice 
     described in clause (i) with respect to the State; and
       (iv) annually publish the status of all States with respect 
     to certifications.
       (4) Construction.--Nothing in this subsection shall be 
     construed as preventing the certification (and approval of 
     certification) of a State law under this subsection solely 
     because it provides for greater protections for patients than 
     those protections otherwise required to establish substantial 
     compliance.
       (5) Petitions.--
       (A) Petition process.--Effective on the date on which the 
     provisions of this Act become effective, as provided for in 
     section 601, a group health plan, health insurance issuer, 
     participant, beneficiary, or enrollee may submit a petition 
     to the Secretary for an advisory opinion as to whether or not 
     a standard or requirement under a State law applicable to the 
     plan, issuer, participant, beneficiary, or enrollee that is 
     not the subject of a certification under this subsection, is 
     superseded under subsection (a)(1) because such standard or 
     requirement prevents the application of a requirement of this 
     title.
       (B) Opinion.--The Secretary shall issue an advisory opinion 
     with respect to a petition submitted under subparagraph (A) 
     within the 60-day period beginning on the date on which such 
     petition is submitted.
       (d) Definitions.--For purposes of this section:
       (1) State law.--The term ``State law'' includes all laws, 
     decisions, rules, regulations, or other State action having 
     the effect of law, of any State. A law of the United States 
     applicable only to the District of Columbia shall be treated 
     as a State law rather than a law of the United States.
       (2) State.--The term ``State'' includes a State, the 
     District of Columbia, Puerto Rico, the Virgin Islands, Guam, 
     American Samoa, the Northern Mariana Islands, any political 
     subdivisions of such, or any agency or instrumentality of 
     such.

     SEC. 153. EXCLUSIONS.

       (a) No Benefit Requirements.--Nothing in this title shall 
     be construed to require a group health plan or a health 
     insurance issuer offering health insurance coverage to 
     include specific items and services under the terms of such a 
     plan or coverage, other than those provided under the terms 
     and conditions of such plan or coverage.
       (b) Exclusion From Access to Care Managed Care Provisions 
     for Fee-for-service Coverage.--
       (1) In general.--The provisions of sections 111 through 117 
     shall not apply to a group health plan or health insurance 
     coverage if the only coverage offered under the plan or 
     coverage is fee-for-service coverage (as defined in paragraph 
     (2)).
       (2) Fee-for-service coverage defined.--For purposes of this 
     subsection, the term ``fee-for-service coverage'' means 
     coverage under a group health plan or health insurance 
     coverage that--
       (A) reimburses hospitals, health professionals, and other 
     providers on a fee-for-service basis without placing the 
     provider at financial risk;
       (B) does not vary reimbursement for such a provider based 
     on an agreement to contract terms and conditions or the 
     utilization of health care items or services relating to such 
     provider;
       (C) allows access to any provider that is lawfully 
     authorized to provide the covered services and that agrees to 
     accept the terms and conditions of payment established under 
     the plan or by the issuer; and
       (D) for which the plan or issuer does not require prior 
     authorization before providing for any health care services.

     SEC. 154. TREATMENT OF EXCEPTED BENEFITS.

       (a) In General.--The requirements of this title and the 
     provisions of sections 502(a)(1)(C), 502(n), and 514(d) of 
     the Employee Retirement Income Security Act of 1974 (added by 
     section 402) shall not apply to excepted benefits (as defined 
     in section 733(c) of such Act), other than benefits described 
     in section 733(c)(2)(A) of such Act, in the same manner as 
     the provisions of part 7 of subtitle B of title I of such Act 
     do not apply to such benefits under subsections (b) and (c) 
     of section 732 of such Act.
       (b) Coverage of Certain Limited Scope Plans.--Only for 
     purposes of applying the requirements of this title under 
     sections 2707 and 2753 of the Public Health Service Act, 
     section 714 of the Employee Retirement Income Security Act of 
     1974, and section 9813 of the Internal Revenue Code of 1986, 
     the following sections shall be deemed not to apply:
       (1) Section 2791(c)(2)(A) of the Public Health Service Act.
       (2) Section 733(c)(2)(A) of the Employee Retirement Income 
     Security Act of 1974.
       (3) Section 9832(c)(2)(A) of the Internal Revenue Code of 
     1986.

     SEC. 155. REGULATIONS.

       The Secretaries of Health and Human Services, Labor, and 
     the Treasury shall issue such regulations as may be necessary 
     or appropriate to carry out this title. Such regulations 
     shall be issued consistent with section 104 of Health 
     Insurance Portability and Accountability Act of 1996. Such 
     Secretaries may promulgate any interim final rules as the 
     Secretaries determine are appropriate to carry out this 
     title.

     SEC. 156. INCORPORATION INTO PLAN OR COVERAGE DOCUMENTS.

       The requirements of this title with respect to a group 
     health plan or health insurance coverage are, subject to 
     section 154, deemed to be incorporated into, and made a part 
     of, such plan or the policy, certificate, or contract 
     providing such coverage and are enforceable under law as if 
     directly included in the documentation of such plan or such 
     policy, certificate, or contract.

     SEC. 157. PRESERVATION OF PROTECTIONS.

       (a) In General.--The rights under this Act (including the 
     right to maintain a civil action and any other rights under 
     the amendments made by this Act) may not be waived, deferred, 
     or lost pursuant to any agreement not authorized under this 
     Act.
       (b) Exception.--Subsection (a) shall not apply to an 
     agreement providing for arbitration or participation in any 
     other nonjudicial procedure to resolve a dispute if the 
     agreement--
       (1) is entered into knowingly and voluntarily by the 
     parties involved after the dispute has arisen; or
       (2) is pursuant to the terms of a collective bargaining 
     agreement.

     Nothing in this subsection shall be construed to permit the 
     waiver of the requirements of sections 103 and 104 (relating 
     to internal and external review).

 TITLE II--APPLICATION OF QUALITY CARE STANDARDS TO GROUP HEALTH PLANS 
   AND HEALTH INSURANCE COVERAGE UNDER THE PUBLIC HEALTH SERVICE ACT

     SEC. 201. APPLICATION TO GROUP HEALTH PLANS AND GROUP HEALTH 
                   INSURANCE COVERAGE.

       (a) In General.--Subpart 2 of part A of title XXVII of the 
     Public Health Service Act is amended by adding at the end the 
     following new section:

     ``SEC. 2707. PATIENT PROTECTION STANDARDS.

       ``Each group health plan shall comply with patient 
     protection requirements under title I of the Patients' Bill 
     of Rights Act of 2005, and each health insurance issuer shall 
     comply with patient protection requirements under such title 
     with respect to group health insurance coverage it offers, 
     and such requirements shall be deemed to be incorporated into 
     this subsection.''.
       (b) Conforming Amendment.--Section 2721(b)(2)(A) of such 
     Act (42 U.S.C. 300gg-21(b)(2)(A)) is amended by inserting 
     ``(other than section 2707)'' after ``requirements of such 
     subparts''.

     SEC. 202. APPLICATION TO INDIVIDUAL HEALTH INSURANCE 
                   COVERAGE.

       Part B of title XXVII of the Public Health Service Act is 
     amended by inserting after section 2752 the following new 
     section:

     ``SEC. 2753. PATIENT PROTECTION STANDARDS.

       ``Each health insurance issuer shall comply with patient 
     protection requirements under title I of the Patients' Bill 
     of Rights Act of 2005 with respect to individual health 
     insurance coverage it offers, and such requirements shall be 
     deemed to be incorporated into this subsection.''.

     SEC. 203. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

       Part C of title XXVII of the Public Health Service Act (42 
     U.S.C. 300gg-91 et seq.) is amended by adding at the end the 
     following:

[[Page 9530]]



     ``SEC. 2793. COOPERATION BETWEEN FEDERAL AND STATE 
                   AUTHORITIES.

       ``(a) Agreement With States.--A State may enter into an 
     agreement with the Secretary for the delegation to the State 
     of some or all of the Secretary's authority under this title 
     to enforce the requirements applicable under title I of the 
     Patients' Bill of Rights Act of 2005 with respect to health 
     insurance coverage offered by a health insurance issuer and 
     with respect to a group health plan that is a non-Federal 
     governmental plan.
       ``(b) Delegations.--Any department, agency, or 
     instrumentality of a State to which authority is delegated 
     pursuant to an agreement entered into under this section may, 
     if authorized under State law and to the extent consistent 
     with such agreement, exercise the powers of the Secretary 
     under this title which relate to such authority.''.

   TITLE III--APPLICATION OF PATIENT PROTECTION STANDARDS TO FEDERAL 
                       HEALTH INSURANCE PROGRAMS

     SEC. 301. APPLICATION OF PATIENT PROTECTION STANDARDS TO 
                   FEDERAL HEALTH INSURANCE PROGRAMS.

       (a) Sense of Congress.--It is the sense of Congress that 
     enrollees in Federal health insurance programs should have 
     the same rights and privileges as those afforded under title 
     I and under the amendments made by title IV to participants 
     and beneficiaries under group health plans.
       (b) Conforming Federal Health Insurance Programs.--It is 
     the sense of Congress that the President should require, by 
     executive order, the Federal official with authority over 
     each Federal health insurance program, to the extent 
     feasible, to take such steps as are necessary to implement 
     the rights and privileges described in subsection (a) with 
     respect to such program.
       (c) GAO Report on Additional Steps Required.--Not later 
     than 1 year after the date of the enactment of this Act, the 
     Comptroller General of the United States shall submit to 
     Congress a report on statutory changes that are required to 
     implement such rights and privileges in a manner that is 
     consistent with the missions of the Federal health insurance 
     programs and that avoids unnecessary duplication or 
     disruption of such programs.
       (d) Federal Health Insurance Program.--In this section, the 
     term ``Federal health insurance program'' means a Federal 
     program that provides creditable coverage (as defined in 
     section 2701(c)(1) of the Public Health Service Act) and 
     includes a health program of the Department of Veterans 
     Affairs.

TITLE IV--AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
                                  1974

     SEC. 401. APPLICATION OF PATIENT PROTECTION STANDARDS TO 
                   GROUP HEALTH PLANS AND GROUP HEALTH INSURANCE 
                   COVERAGE UNDER THE EMPLOYEE RETIREMENT INCOME 
                   SECURITY ACT OF 1974.

       Subpart B of part 7 of subtitle B of title I of the 
     Employee Retirement Income Security Act of 1974 is amended by 
     adding at the end the following new section:

     ``SEC. 714. PATIENT PROTECTION STANDARDS.

       ``(a) In General.--Subject to subsection (b), a group 
     health plan (and a health insurance issuer offering group 
     health insurance coverage in connection with such a plan) 
     shall comply with the requirements of title I of the 
     Patients' Bill of Rights Act of 2005 (as in effect as of the 
     date of the enactment of such Act), and such requirements 
     shall be deemed to be incorporated into this subsection.
       ``(b) Plan Satisfaction of Certain Requirements.--
       ``(1) Satisfaction of certain requirements through 
     insurance.--For purposes of subsection (a), insofar as a 
     group health plan provides benefits in the form of health 
     insurance coverage through a health insurance issuer, the 
     plan shall be treated as meeting the following requirements 
     of title I of the Patients' Bill of Rights Act of 2005 with 
     respect to such benefits and not be considered as failing to 
     meet such requirements because of a failure of the issuer to 
     meet such requirements so long as the plan sponsor or its 
     representatives did not cause such failure by the issuer:
       ``(A) Section 111 (relating to consumer choice option).
       ``(B) Section 112 (relating to choice of health care 
     professional).
       ``(C) Section 113 (relating to access to emergency care).
       ``(D) Section 114 (relating to timely access to 
     specialists).
       ``(E) Section 115 (relating to patient access to 
     obstetrical and gynecological care).
       ``(F) Section 116 (relating to access to pediatric care).
       ``(G) Section 117 (relating to continuity of care), but 
     only insofar as a replacement issuer assumes the obligation 
     for continuity of care.
       ``(H) Section 118 (relating to access to needed 
     prescription drugs).
       ``(I) Section 119 (relating to coverage for individuals 
     participating in approved clinical trials).
       ``(J) Section 120 (relating to required coverage for 
     minimum hospital stay for mastectomies and lymph node 
     dissections for the treatment of breast cancer and coverage 
     for secondary consultations).
       ``(K) Section 134 (relating to payment of claims).
       ``(2) Information.--With respect to information required to 
     be provided or made available under section 121 of the 
     Patients' Bill of Rights Act of 2005, in the case of a group 
     health plan that provides benefits in the form of health 
     insurance coverage through a health insurance issuer, the 
     Secretary shall determine the circumstances under which the 
     plan is not required to provide or make available the 
     information (and is not liable for the issuer's failure to 
     provide or make available the information), if the issuer is 
     obligated to provide and make available (or provides and 
     makes available) such information.
       ``(3) Internal appeals.--With respect to the internal 
     appeals process required to be established under section 103 
     of such Act, in the case of a group health plan that provides 
     benefits in the form of health insurance coverage through a 
     health insurance issuer, the Secretary shall determine the 
     circumstances under which the plan is not required to provide 
     for such process and system (and is not liable for the 
     issuer's failure to provide for such process and system), if 
     the issuer is obligated to provide for (and provides for) 
     such process and system.
       ``(4) External appeals.--Pursuant to rules of the 
     Secretary, insofar as a group health plan enters into a 
     contract with a qualified external appeal entity for the 
     conduct of external appeal activities in accordance with 
     section 104 of such Act, the plan shall be treated as meeting 
     the requirement of such section and is not liable for the 
     entity's failure to meet any requirements under such section.
       ``(5) Application to prohibitions.--Pursuant to rules of 
     the Secretary, if a health insurance issuer offers health 
     insurance coverage in connection with a group health plan and 
     takes an action in violation of any of the following sections 
     of the Patients' Bill of Rights Act of 2005, the group health 
     plan shall not be liable for such violation unless the plan 
     caused such violation:
       ``(A) Section 131 (relating to prohibition of interference 
     with certain medical communications).
       ``(B) Section 132 (relating to prohibition of 
     discrimination against providers based on licensure).
       ``(C) Section 133 (relating to prohibition against improper 
     incentive arrangements).
       ``(D) Section 135 (relating to protection for patient 
     advocacy).
       ``(6) Construction.--Nothing in this subsection shall be 
     construed to affect or modify the responsibilities of the 
     fiduciaries of a group health plan under part 4 of subtitle 
     B.
       ``(7) Treatment of substantially compliant state laws.--For 
     purposes of applying this subsection in connection with 
     health insurance coverage, any reference in this subsection 
     to a requirement in a section or other provision in the 
     Patients' Bill of Rights Act of 2005 with respect to a health 
     insurance issuer is deemed to include a reference to a 
     requirement under a State law that substantially complies (as 
     determined under section 152(c) of such Act) with the 
     requirement in such section or other provisions.
       ``(8) Application to certain prohibitions against 
     retaliation.--With respect to compliance with the 
     requirements of section 135(b)(1) of the Patients' Bill of 
     Rights Act of 2005, for purposes of this subtitle the term 
     `group health plan' is deemed to include a reference to an 
     institutional health care provider.
       ``(c) Enforcement of Certain Requirements.--
       ``(1) Complaints.--Any protected health care professional 
     who believes that the professional has been retaliated or 
     discriminated against in violation of section 135(b)(1) of 
     the Patients' Bill of Rights Act of 2005 may file with the 
     Secretary a complaint within 180 days of the date of the 
     alleged retaliation or discrimination.
       ``(2) Investigation.--The Secretary shall investigate such 
     complaints and shall determine if a violation of such section 
     has occurred and, if so, shall issue an order to ensure that 
     the protected health care professional does not suffer any 
     loss of position, pay, or benefits in relation to the plan, 
     issuer, or provider involved, as a result of the violation 
     found by the Secretary.
       ``(d) Conforming Regulations.--The Secretary shall issue 
     regulations to coordinate the requirements on group health 
     plans and health insurance issuers under this section with 
     the requirements imposed under the other provisions of this 
     title. In order to reduce duplication and clarify the rights 
     of participants and beneficiaries with respect to information 
     that is required to be provided, such regulations shall 
     coordinate the information disclosure requirements under 
     section 121 of the Patients' Bill of Rights Act of 2005 with 
     the reporting and disclosure requirements imposed under part 
     1, so long as such coordination does not result in any 
     reduction in the information that would otherwise be provided 
     to participants and beneficiaries.''.
       (b) Satisfaction of ERISA Claims Procedure Requirement.--
     Section 503 of such Act (29 U.S.C. 1133) is amended by 
     inserting ``(a)''

[[Page 9531]]

     after ``Sec. 503.'' and by adding at the end the following 
     new subsection:
       ``(b) In the case of a group health plan (as defined in 
     section 733), compliance with the requirements of subtitle A 
     of title I of the Patients' Bill of Rights Act of 2005, and 
     compliance with regulations promulgated by the Secretary, in 
     the case of a claims denial, shall be deemed compliance with 
     subsection (a) with respect to such claims denial.''.
       (c) Conforming Amendments.--(1) Section 732(a) of such Act 
     (29 U.S.C. 1185(a)) is amended by striking ``section 711'' 
     and inserting ``sections 711 and 714''.
       (2) The table of contents in section 1 of such Act is 
     amended by inserting after the item relating to section 713 
     the following new item:

``714. Patient protection standards''.

       (3) Section 502(b)(3) of such Act (29 U.S.C. 1132(b)(3)) is 
     amended by inserting ``(other than section 135(b) of the 
     Patients' Bill of Rights Act of 2005, as deemed by subsection 
     (a) of section 714 of this Act to be incorporated into such 
     subsection)'' after ``part 7''.

     SEC. 402. AVAILABILITY OF CIVIL REMEDIES.

       (a) Availability of Federal Civil Remedies in Cases Not 
     Involving Medically Reviewable Decisions.--
       (1) In general.--Section 502 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1132) is amended by 
     adding at the end the following new subsections:
       ``(n) Cause of Action Relating to Provision of Health 
     Benefits.--
       ``(1) In general.--In any case in which--
       ``(A) a person who is a fiduciary of a group health plan, a 
     health insurance issuer offering health insurance coverage in 
     connection with the plan, or an agent of the plan, issuer, or 
     plan sponsor, upon consideration of a claim for benefits of a 
     participant or beneficiary under section 102 of the Patients' 
     Bill of Rights Act of 2005 (relating to procedures for 
     initial claims for benefits and prior authorization 
     determinations) or upon review of a denial of such a claim 
     under section 103 of such Act (relating to internal appeal of 
     a denial of a claim for benefits), fails to exercise ordinary 
     care in making a decision--
       ``(i) regarding whether an item or service is covered under 
     the terms and conditions of the plan or coverage,
       ``(ii) regarding whether an individual is a participant or 
     beneficiary who is enrolled under the terms and conditions of 
     the plan or coverage (including the applicability of any 
     waiting period under the plan or coverage), or
       ``(iii) as to the application of cost-sharing requirements 
     or the application of a specific exclusion or express 
     limitation on the amount, duration, or scope of coverage of 
     items or services under the terms and conditions of the plan 
     or coverage, and
       ``(B) such failure is a proximate cause of personal injury 
     to, or the death of, the participant or beneficiary,
     such plan, plan sponsor, or issuer shall be liable to the 
     participant or beneficiary (or the estate of such participant 
     or beneficiary) for economic and noneconomic damages (but not 
     exemplary or punitive damages) in connection with such 
     personal injury or death.
       ``(2) Cause of action must not involve medically reviewable 
     decision.--
       ``(A) In general.--A cause of action is established under 
     paragraph (1)(A) only if the decision referred to in 
     paragraph (1)(A) does not include a medically reviewable 
     decision.
       ``(B) Medically reviewable decision.--For purposes of this 
     subsection, the term `medically reviewable decision' means a 
     denial of a claim for benefits under the plan which is 
     described in section 104(d)(2) of the Patients' Bill of 
     Rights Act of 2005 (relating to medically reviewable 
     decisions).
       ``(3) Limitation regarding certain types of actions saved 
     from preemption of state law.--A cause of action is not 
     established under paragraph (1)(A) in connection with a 
     failure described in paragraph (1)(A) to the extent that a 
     cause of action under State law (as defined in section 
     514(c)) for such failure would not be preempted under section 
     514.
       ``(4) Definitions and related rules.--For purposes of this 
     subsection.--
       ``(A) Ordinary care.--The term `ordinary care' means, with 
     respect to a determination on a claim for benefits, that 
     degree of care, skill, and diligence that a reasonable and 
     prudent individual would exercise in making a fair 
     determination on a claim for benefits of like kind to the 
     claims involved.
       ``(B) Personal injury.--The term `personal injury' means a 
     physical injury and includes an injury arising out of the 
     treatment (or failure to treat) a mental illness or disease.
       ``(C) Claim for benefits; denial.--The terms `claim for 
     benefits' and `denial of a claim for benefits' have the 
     meanings provided such terms in section 102(e) of the 
     Patients' Bill of Rights Act of 2005.
       ``(D) Terms and conditions.--The term `terms and 
     conditions' includes, with respect to a group health plan or 
     health insurance coverage, requirements imposed under title I 
     of the Patients' Bill of Rights Act of 2005.
       ``(E) Treatment of excepted benefits.--Under section 154(a) 
     of the Patients' Bill of Rights Act of 2005, the provisions 
     of this subsection and subsection (a)(1)(C) do not apply to 
     certain excepted benefits.
       ``(5) Exclusion of employers and other plan sponsors.--
       ``(A) Causes of action against employers and plan sponsors 
     precluded.--Subject to subparagraph (B), paragraph (1)(A) 
     does not authorize a cause of action against an employer or 
     other plan sponsor maintaining the plan (or against an 
     employee of such an employer or sponsor acting within the 
     scope of employment).
       ``(B) Certain causes of action permitted.--Notwithstanding 
     subparagraph (A), a cause of action may arise against an 
     employer or other plan sponsor (or against an employee of 
     such an employer or sponsor acting within the scope of 
     employment) under paragraph (1)(A), to the extent there was 
     direct participation by the employer or other plan sponsor 
     (or employee) in the decision of the plan under section 102 
     of the Patients' Bill of Rights Act of 2005 upon 
     consideration of a claim for benefits or under section 103 of 
     such Act upon review of a denial of a claim for benefits.
       ``(C) Direct participation.--
       ``(i) In general.--For purposes of subparagraph (B), the 
     term `direct participation' means, in connection with a 
     decision described in paragraph (1)(A), the actual making of 
     such decision or the actual exercise of control in making 
     such decision.
       ``(ii) Rules of construction.--For purposes of clause (i), 
     the employer or plan sponsor (or employee) shall not be 
     construed to be engaged in direct participation because of 
     any form of decisionmaking or other conduct that is merely 
     collateral or precedent to the decision described in 
     paragraph (1)(A) on a particular claim for benefits of a 
     participant or beneficiary, including (but not limited to)--

       ``(I) any participation by the employer or other plan 
     sponsor (or employee) in the selection of the group health 
     plan or health insurance coverage involved or the third party 
     administrator or other agent;
       ``(II) any engagement by the employer or other plan sponsor 
     (or employee) in any cost-benefit analysis undertaken in 
     connection with the selection of, or continued maintenance 
     of, the plan or coverage involved;
       ``(III) any participation by the employer or other plan 
     sponsor (or employee) in the process of creating, continuing, 
     modifying, or terminating the plan or any benefit under the 
     plan, if such process was not substantially focused solely on 
     the particular situation of the participant or beneficiary 
     referred to in paragraph (1)(A); and
       ``(IV) any participation by the employer or other plan 
     sponsor (or employee) in the design of any benefit under the 
     plan, including the amount of copayment and limits connected 
     with such benefit.

       ``(iii) Irrelevance of certain collateral efforts made by 
     employer or plan sponsor.--For purposes of this subparagraph, 
     an employer or plan sponsor shall not be treated as engaged 
     in direct participation in a decision with respect to any 
     claim for benefits or denial thereof in the case of any 
     particular participant or beneficiary solely by reason of--

       ``(I) any efforts that may have been made by the employer 
     or plan sponsor to advocate for authorization of coverage for 
     that or any other participant or beneficiary (or any group of 
     participants or beneficiaries), or
       ``(II) any provision that may have been made by the 
     employer or plan sponsor for benefits which are not covered 
     under the terms and conditions of the plan for that or any 
     other participant or beneficiary (or any group of 
     participants or beneficiaries).

       ``(D) Application to certain plans.--
       ``(i) In general.--Notwithstanding any other provision of 
     this subsection, no group health plan described in clause 
     (ii) (or plan sponsor of such a plan) shall be liable under 
     paragraph (1) for the performance of, or the failure to 
     perform, any non-medically reviewable duty under the plan.
       ``(ii) Definition.--A group health plan described in this 
     clause is--

       ``(I) a group health plan that is self-insured and self 
     administered by an employer (including an employee of such an 
     employer acting within the scope of employment); or
       ``(II) a multiemployer plan as defined in section 3(37)(A) 
     (including an employee of a contributing employer or of the 
     plan, or a fiduciary of the plan, acting within the scope of 
     employment or fiduciary responsibility) that is self-insured 
     and self-administered.

       ``(6) Exclusion of physicians and other health care 
     professionals.--
       ``(A) In general.--No treating physician or other treating 
     health care professional of the participant or beneficiary, 
     and no person acting under the direction of such a physician 
     or health care professional, shall be liable under paragraph 
     (1) for the performance of, or the failure to perform, any 
     non-medically reviewable duty of the plan, the plan sponsor, 
     or any health insurance issuer offering health insurance 
     coverage in connection with the plan.
       ``(B) Definitions.--For purposes of subparagraph (A)--
       ``(i) Health care professional.--The term `health care 
     professional' means an individual who is licensed, 
     accredited, or certified under State law to provide specified 
     health care services and who is operating within the scope of 
     such licensure, accreditation, or certification.
       ``(ii) Non-medically reviewable duty.--The term `non-
     medically reviewable duty'

[[Page 9532]]

     means a duty the discharge of which does not include the 
     making of a medically reviewable decision.
       ``(7) Exclusion of hospitals.--No treating hospital of the 
     participant or beneficiary shall be liable under paragraph 
     (1) for the performance of, or the failure to perform, any 
     non-medically reviewable duty (as defined in paragraph 
     (6)(B)(ii)) of the plan, the plan sponsor, or any health 
     insurance issuer offering health insurance coverage in 
     connection with the plan.
       ``(8) Rule of construction relating to exclusion from 
     liability of physicians, health care professionals, and 
     hospitals.--Nothing in paragraph (6) or (7) shall be 
     construed to limit the liability (whether direct or 
     vicarious) of the plan, the plan sponsor, or any health 
     insurance issuer offering health insurance coverage in 
     connection with the plan.
       ``(9) Requirement of exhaustion.--
       ``(A) In general.--A cause of action may not be brought 
     under paragraph (1) in connection with any denial of a claim 
     for benefits of any individual until all administrative 
     processes under sections 102 and 103 of the Patients' Bill of 
     Rights Act of 2005 (if applicable) have been exhausted.
       ``(B) Exception for needed care.--A participant or 
     beneficiary may seek relief exclusively in Federal court 
     under subsection 502(a)(1)(B) prior to the exhaustion of 
     administrative remedies under sections 102, 103, or 104 of 
     the Patients' Bill of Rights Act of 2005 (as required under 
     subparagraph (A)) if it is demonstrated to the court that the 
     exhaustion of such remedies would cause irreparable harm to 
     the health of the participant or beneficiary. Notwithstanding 
     the awarding of relief under subsection 502(a)(1)(B) pursuant 
     to this subparagraph, no relief shall be available as a 
     result of, or arising under, paragraph (1)(A) or paragraph 
     (10)(B), with respect to a participant or beneficiary, unless 
     the requirements of subparagraph (A) are met.
       ``(C) Receipt of benefits during appeals process.--Receipt 
     by the participant or beneficiary of the benefits involved in 
     the claim for benefits during the pendency of any 
     administrative processes referred to in subparagraph (A) or 
     of any action commenced under this subsection--
       ``(i) shall not preclude continuation of all such 
     administrative processes to their conclusion if so moved by 
     any party, and
       ``(ii) shall not preclude any liability under subsection 
     (a)(1)(C) and this subsection in connection with such claim.
     The court in any action commenced under this subsection shall 
     take into account any receipt of benefits during such 
     administrative processes or such action in determining the 
     amount of the damages awarded.
       ``(D) Admissible.--Any determination made by a reviewer in 
     an administrative proceeding under section 103 of the 
     Patients' Bill of Rights Act of 2005 shall be admissible in 
     any Federal court proceeding and shall be presented to the 
     trier of fact.
       ``(10) Statutory damages.--
       ``(A) In general.--The remedies set forth in this 
     subsection (n) shall be the exclusive remedies for causes of 
     action brought under this subsection.
       ``(B) Assessment of civil penalties.--In addition to the 
     remedies provided for in paragraph (1) (relating to the 
     failure to provide contract benefits in accordance with the 
     plan), a civil assessment, in an amount not to exceed 
     $5,000,000, payable to the claimant may be awarded in any 
     action under such paragraph if the claimant establishes by 
     clear and convincing evidence that the alleged conduct 
     carried out by the defendant demonstrated bad faith and 
     flagrant disregard for the rights of the participant or 
     beneficiary under the plan and was a proximate cause of the 
     personal injury or death that is the subject of the claim.
       ``(11) Limitation on attorneys' fees.--
       ``(A) In general.--Notwithstanding any other provision of 
     law, or any arrangement, agreement, or contract regarding an 
     attorney's fee, the amount of an attorney's contingency fee 
     allowable for a cause of action brought pursuant to this 
     subsection shall not exceed \1/3\ of the total amount of the 
     plaintiff's recovery (not including the reimbursement of 
     actual out-of-pocket expenses of the attorney).
       ``(B) Determination by district court.--The last Federal 
     district court in which the action was pending upon the final 
     disposition, including all appeals, of the action shall have 
     jurisdiction to review the attorney's fee to ensure that the 
     fee is a reasonable one.
       ``(12) Limitation of action.--Paragraph (1) shall not apply 
     in connection with any action commenced after 3 years after 
     the later of--
       ``(A) the date on which the plaintiff first knew, or 
     reasonably should have known, of the personal injury or death 
     resulting from the failure described in paragraph (1), or
       ``(B) the date as of which the requirements of paragraph 
     (9) are first met.
       ``(13) Tolling provision.--The statute of limitations for 
     any cause of action arising under State law relating to a 
     denial of a claim for benefits that is the subject of an 
     action brought in Federal court under this subsection shall 
     be tolled until such time as the Federal court makes a final 
     disposition, including all appeals, of whether such claim 
     should properly be within the jurisdiction of the Federal 
     court. The tolling period shall be determined by the 
     applicable Federal or State law, whichever period is greater.
       ``(14) Purchase of insurance to cover liability.--Nothing 
     in section 410 shall be construed to preclude the purchase by 
     a group health plan of insurance to cover any liability or 
     losses arising under a cause of action under subsection 
     (a)(1)(C) and this subsection.
       ``(15) Exclusion of directed recordkeepers.--
       ``(A) In general.--Subject to subparagraph (C), paragraph 
     (1) shall not apply with respect to a directed recordkeeper 
     in connection with a group health plan.
       ``(B) Directed recordkeeper.--For purposes of this 
     paragraph, the term `directed recordkeeper' means, in 
     connection with a group health plan, a person engaged in 
     directed recordkeeping activities pursuant to the specific 
     instructions of the plan or the employer or other plan 
     sponsor, including the distribution of enrollment information 
     and distribution of disclosure materials under this Act or 
     title I of the Patients' Bill of Rights Act of 2005 and whose 
     duties do not include making decisions on claims for 
     benefits.
       ``(C) Limitation.--Subparagraph (A) does not apply in 
     connection with any directed recordkeeper to the extent that 
     the directed recordkeeper fails to follow the specific 
     instruction of the plan or the employer or other plan 
     sponsor.
       ``(16) Exclusion of health insurance agents.--Paragraph (1) 
     does not apply with respect to a person whose sole 
     involvement with the group health plan is providing advice or 
     administrative services to the employer or other plan sponsor 
     relating to the selection of health insurance coverage 
     offered in connection with the plan.
       ``(17) No effect on state law.--No provision of State law 
     (as defined in section 514(c)(1)) shall be treated as 
     superseded or otherwise altered, amended, modified, 
     invalidated, or impaired by reason of the provisions of 
     subsection (a)(1)(C) and this subsection.
       ``(18) Relief from liability for employer or other plan 
     sponsor by means of designated decisionmaker.--
       ``(A) In general.--Notwithstanding the direct participation 
     (as defined in paragraph (5)(C)(i)) of an employer or plan 
     sponsor, in any case in which there is (or is deemed under 
     subparagraph (B) to be) a designated decisionmaker under 
     subparagraph (B) that meets the requirements of subsection 
     (o)(1) for an employer or other plan sponsor--
       ``(i) all liability of such employer or plan sponsor 
     involved (and any employee of such employer or sponsor acting 
     within the scope of employment) under this subsection in 
     connection with any participant or beneficiary shall be 
     transferred to, and assumed by, the designated decisionmaker, 
     and
       ``(ii) with respect to such liability, the designated 
     decisionmaker shall be substituted for the employer or 
     sponsor (or employee) in the action and may not raise any 
     defense that the employer or sponsor (or employee) could not 
     raise if such a decisionmaker were not so deemed.
       ``(B) Automatic designation.--A health insurance issuer 
     shall be deemed to be a designated decisionmaker for purposes 
     of subparagraph (A) with respect to the participants and 
     beneficiaries of an employer or plan sponsor, whether or not 
     the employer or plan sponsor makes such a designation, and 
     shall be deemed to have assumed unconditionally all liability 
     of the employer or plan sponsor under such designation in 
     accordance with subsection (o), unless the employer or plan 
     sponsor affirmatively enters into a contract to prevent the 
     service of the designated decisionmaker.
       ``(C) Treatment of certain trust funds.--For purposes of 
     this paragraph, the terms `employer' and `plan sponsor', in 
     connection with the assumption by a designated decisionmaker 
     of the liability of employer or other plan sponsor pursuant 
     to this paragraph, shall be construed to include a trust fund 
     maintained pursuant to section 302 of the Labor Management 
     Relations Act, 1947 (29 U.S.C. 186) or the Railway Labor Act 
     (45 U.S.C. 151 et seq.).
       ``(19) Previously provided services.--
       ``(A) In general.--Except as provided in this paragraph, a 
     cause of action shall not arise under paragraph (1) where the 
     denial involved relates to an item or service that has 
     already been fully provided to the participant or beneficiary 
     under the plan or coverage and the claim relates solely to 
     the subsequent denial of payment for the provision of such 
     item or service.
       ``(B) Exception.--Nothing in subparagraph (A) shall be 
     construed to--
       ``(i) prohibit a cause of action under paragraph (1) where 
     the nonpayment involved results in the participant or 
     beneficiary being unable to receive further items or services 
     that are directly related to the item or service involved in 
     the denial referred to in subparagraph (A) or that are part 
     of a continuing treatment or series of procedures; or
       ``(ii) limit liability that otherwise would arise from the 
     provision of the item or services or the performance of a 
     medical procedure.

[[Page 9533]]

       ``(20) Exemption from personal liability for individual 
     members of boards of directors, joint boards of trustees, 
     etc.--Any individual who is--
       ``(A) a member of a board of directors of an employer or 
     plan sponsor; or
       ``(B) a member of an association, committee, employee 
     organization, joint board of trustees, or other similar group 
     of representatives of the entities that are the plan sponsor 
     of plan maintained by two or more employers and one or more 
     employee organizations;
     shall not be personally liable under this subsection for 
     conduct that is within the scope of employment or of plan-
     related duties of the individuals unless the individual acts 
     in a fraudulent manner for personal enrichment.
       ``(o) Requirements for Designated Decisionmakers of Group 
     Health Plans.--
       ``(1) In general.--For purposes of subsection (n)(18) and 
     section 514(d)(9), a designated decisionmaker meets the 
     requirements of this paragraph with respect to any 
     participant or beneficiary if--
       ``(A) such designation is in such form as may be prescribed 
     in regulations of the Secretary,
       ``(B) the designated decisionmaker--
       ``(i) meets the requirements of paragraph (2),
       ``(ii) assumes unconditionally all liability of the 
     employer or plan sponsor involved (and any employee of such 
     employer or sponsor acting within the scope of employment) 
     either arising under subsection (n) or arising in a cause of 
     action permitted under section 514(d) in connection with 
     actions (and failures to act) of the employer or plan sponsor 
     (or employee) occurring during the period in which the 
     designation under subsection (n)(18) or section 514(d)(9) is 
     in effect relating to such participant and beneficiary,
       ``(iii) agrees to be substituted for the employer or plan 
     sponsor (or employee) in the action and not to raise any 
     defense with respect to such liability that the employer or 
     plan sponsor (or employee) may not raise, and
       ``(iv) where paragraph (2)(B) applies, assumes 
     unconditionally the exclusive authority under the group 
     health plan to make medically reviewable decisions under the 
     plan with respect to such participant or beneficiary, and
       ``(C) the designated decisionmaker and the participants and 
     beneficiaries for whom the decisionmaker has assumed 
     liability are identified in the written instrument required 
     under section 402(a) and as required under section 121(b)(19) 
     of the Patients' Bill of Rights Act of 2005.
     Any liability assumed by a designated decisionmaker pursuant 
     to this subsection shall be in addition to any liability that 
     it may otherwise have under applicable law.
       ``(2) Qualifications for designated decisionmakers.--
       ``(A) In general.--Subject to subparagraph (B), an entity 
     is qualified under this paragraph to serve as a designated 
     decisionmaker with respect to a group health plan if the 
     entity has the ability to assume the liability described in 
     paragraph (1) with respect to participants and beneficiaries 
     under such plan, including requirements relating to the 
     financial obligation for timely satisfying the assumed 
     liability, and maintains with the plan sponsor and the 
     Secretary certification of such ability. Such certification 
     shall be provided to the plan sponsor or named fiduciary and 
     to the Secretary upon designation under subsection (n)(18)(B) 
     or section 517(d)(9)(B) and not less frequently than annually 
     thereafter, or if such designation constitutes a multiyear 
     arrangement, in conjunction with the renewal of the 
     arrangement.
       ``(B) Special qualification in the case of certain 
     reviewable decisions.--In the case of a group health plan 
     that provides benefits consisting of medical care to a 
     participant or beneficiary only through health insurance 
     coverage offered by a single health insurance issuer, such 
     issuer is the only entity that may be qualified under this 
     paragraph to serve as a designated decisionmaker with respect 
     to such participant or beneficiary, and shall serve as the 
     designated decisionmaker unless the employer or other plan 
     sponsor acts affirmatively to prevent such service.
       ``(3) Requirements relating to financial obligations.--For 
     purposes of paragraph (2)(A), the requirements relating to 
     the financial obligation of an entity for liability shall 
     include--
       ``(A) coverage of such entity under an insurance policy or 
     other arrangement, secured and maintained by such entity, to 
     effectively insure such entity against losses arising from 
     professional liability claims, including those arising from 
     its service as a designated decisionmaker under this part; or
       ``(B) evidence of minimum capital and surplus levels that 
     are maintained by such entity to cover any losses as a result 
     of liability arising from its service as a designated 
     decisionmaker under this part.
     The appropriate amounts of liability insurance and minimum 
     capital and surplus levels for purposes of subparagraphs (A) 
     and (B) shall be determined by an actuary using sound 
     actuarial principles and accounting practices pursuant to 
     established guidelines of the American Academy of Actuaries 
     and in accordance with such regulations as the Secretary may 
     prescribe and shall be maintained throughout the term for 
     which the designation is in effect. The provisions of this 
     paragraph shall not apply in the case of a designated 
     decisionmaker that is a group health plan, plan sponsor, or 
     health insurance issuer and that is regulated under Federal 
     law or a State financial solvency law.
       ``(4) Limitation on appointment of treating physicians.--A 
     treating physician who directly delivered the care, 
     treatment, or provided the patient service that is the 
     subject of a cause of action by a participant or beneficiary 
     under subsection (n) or section 514(d) may not be designated 
     as a designated decisionmaker under this subsection with 
     respect to such participant or beneficiary.''.
       (2) Conforming amendment.--Section 502(a)(1) of such Act 
     (29 U.S.C. 1132(a)(1)) is amended--
       (A) by striking ``or'' at the end of subparagraph (A);
       (B) in subparagraph (B), by striking ``plan;'' and 
     inserting ``plan, or''; and
       (C) by adding at the end the following new subparagraph:
       ``(C) for the relief provided for in subsection (n) of this 
     section.''.
       (b) Rules Relating to ERISA Preemption.--Section 514 of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1144) is amended--
       (1) by redesignating subsection (d) as subsection (f); and
       (2) by inserting after subsection (c) the following new 
     subsections:
       ``(d) Preemption Not to Apply to Causes of Action Under 
     State Law Involving Medically Reviewable Decision.--
       ``(1) Non-preemption of certain causes of action.--
       ``(A) In general.--Except as provided in this subsection, 
     nothing in this title (including section 502) shall be 
     construed to supersede or otherwise alter, amend, modify, 
     invalidate, or impair any cause of action under State law of 
     a participant or beneficiary under a group health plan (or 
     the estate of such a participant or beneficiary) against the 
     plan, the plan sponsor, any health insurance issuer offering 
     health insurance coverage in connection with the plan, or any 
     managed care entity in connection with the plan to recover 
     damages resulting from personal injury or for wrongful death 
     if such cause of action arises by reason of a medically 
     reviewable decision.
       ``(B) Medically reviewable decision.--For purposes of 
     subparagraph (A), the term `medically reviewable decision' 
     means a denial of a claim for benefits under the plan which 
     is described in section 104(d)(2) of the Patients' Bill of 
     Rights Act of 2005 (relating to medically reviewable 
     decisions).
       ``(C) Limitation on punitive damages.--
       ``(i) In general.--Except as provided in clauses (ii) and 
     (iii), with respect to a cause of action described in 
     subparagraph (A) brought with respect to a participant or 
     beneficiary, State law is superseded insofar as it provides 
     any punitive, exemplary, or similar damages if, as of the 
     time of the personal injury or death, all the requirements of 
     the following sections of the Patients' Bill of Rights Act of 
     2005 were satisfied with respect to the participant or 
     beneficiary:

       ``(I) Section 102 (relating to procedures for initial 
     claims for benefits and prior authorization determinations).
       ``(II) Section 103 of such Act (relating to internal 
     appeals of claims denials).
       ``(III) Section 104 of such Act (relating to independent 
     external appeals procedures).

       ``(ii) Exception for certain actions for wrongful death.--
     Clause (i) shall not apply with respect to an action for 
     wrongful death if the applicable State law provides (or has 
     been construed to provide) for damages in such an action 
     which are only punitive or exemplary in nature.
       ``(iii) Exception for willful or wanton disregard for the 
     rights or safety of others.--Clause (i) shall not apply with 
     respect to any cause of action described in subparagraph (A) 
     if, in such action, the plaintiff establishes by clear and 
     convincing evidence that conduct carried out by the defendant 
     with willful or wanton disregard for the rights or safety of 
     others was a proximate cause of the personal injury or 
     wrongful death that is the subject of the action.
       ``(2) Definitions and related rules.--For purposes of this 
     subsection and subsection (e)--
       ``(A) Treatment of excepted benefits.--Under section 154(a) 
     of the Patients' Bill of Rights Act of 2005, the provisions 
     of this subsection do not apply to certain excepted benefits.
       ``(B) Personal injury.--The term `personal injury' means a 
     physical injury and includes an injury arising out of the 
     treatment (or failure to treat) a mental illness or disease.
       ``(C) Claim for benefit; denial.--The terms `claim for 
     benefits' and `denial of a claim for benefits' shall have the 
     meaning provided such terms under section 102(e) of the 
     Patients' Bill of Rights Act of 2005.
       ``(D) Managed care entity.--
       ``(i) In general.--The term `managed care entity' means, in 
     connection with a group health plan and subject to clause 
     (ii), any entity that is involved in determining the manner 
     in which or the extent to which items or

[[Page 9534]]

     services (or reimbursement therefor) are to be provided as 
     benefits under the plan.
       ``(ii) Treatment of treating physicians, other treating 
     health care professionals, and treating hospitals.--Such term 
     does not include a treating physician or other treating 
     health care professional (as defined in section 
     502(n)(6)(B)(i)) of the participant or beneficiary and also 
     does not include a treating hospital insofar as it is acting 
     solely in the capacity of providing treatment or care to the 
     participant or beneficiary. Nothing in the preceding sentence 
     shall be construed to preempt vicarious liability of any 
     plan, plan sponsor, health insurance issuer, or managed care 
     entity.
       ``(3) Exclusion of employers and other plan sponsors.--
       ``(A) Causes of action against employers and plan sponsors 
     precluded.--Subject to subparagraph (B), paragraph (1) does 
     not apply with respect to--
       ``(i) any cause of action against an employer or other plan 
     sponsor maintaining the plan (or against an employee of such 
     an employer or sponsor acting within the scope of 
     employment), or
       ``(ii) a right of recovery, indemnity, or contribution by a 
     person against an employer or other plan sponsor (or such an 
     employee) for damages assessed against the person pursuant to 
     a cause of action to which paragraph (1) applies.
       ``(B) Certain causes of action permitted.--Notwithstanding 
     subparagraph (A), paragraph (1) applies with respect to any 
     cause of action that is brought by a participant or 
     beneficiary under a group health plan (or the estate of such 
     a participant or beneficiary) to recover damages resulting 
     from personal injury or for wrongful death against any 
     employer or other plan sponsor maintaining the plan (or 
     against an employee of such an employer or sponsor acting 
     within the scope of employment) if such cause of action 
     arises by reason of a medically reviewable decision, to the 
     extent that there was direct participation by the employer or 
     other plan sponsor (or employee) in the decision.
       ``(C) Direct participation.--
       ``(i) Direct participation in decisions.--For purposes of 
     subparagraph (B), the term `direct participation' means, in 
     connection with a decision described in subparagraph (B), the 
     actual making of such decision or the actual exercise of 
     control in making such decision or in the conduct 
     constituting the failure.
       ``(ii) Rules of construction.--For purposes of clause (i), 
     the employer or plan sponsor (or employee) shall not be 
     construed to be engaged in direct participation because of 
     any form of decisionmaking or other conduct that is merely 
     collateral or precedent to the decision described in 
     subparagraph (B) on a particular claim for benefits of a 
     particular participant or beneficiary, including (but not 
     limited to)--

       ``(I) any participation by the employer or other plan 
     sponsor (or employee) in the selection of the group health 
     plan or health insurance coverage involved or the third party 
     administrator or other agent;
       ``(II) any engagement by the employer or other plan sponsor 
     (or employee) in any cost-benefit analysis undertaken in 
     connection with the selection of, or continued maintenance 
     of, the plan or coverage involved;
       ``(III) any participation by the employer or other plan 
     sponsor (or employee) in the process of creating, continuing, 
     modifying, or terminating the plan or any benefit under the 
     plan, if such process was not substantially focused solely on 
     the particular situation of the participant or beneficiary 
     referred to in paragraph (1)(A); and
       ``(IV) any participation by the employer or other plan 
     sponsor (or employee) in the design of any benefit under the 
     plan, including the amount of copayment and limits connected 
     with such benefit.

       ``(iv) Irrelevance of certain collateral efforts made by 
     employer or plan sponsor.--For purposes of this subparagraph, 
     an employer or plan sponsor shall not be treated as engaged 
     in direct participation in a decision with respect to any 
     claim for benefits or denial thereof in the case of any 
     particular participant or beneficiary solely by reason of--

       ``(I) any efforts that may have been made by the employer 
     or plan sponsor to advocate for authorization of coverage for 
     that or any other participant or beneficiary (or any group of 
     participants or beneficiaries), or
       ``(II) any provision that may have been made by the 
     employer or plan sponsor for benefits which are not covered 
     under the terms and conditions of the plan for that or any 
     other participant or beneficiary (or any group of 
     participants or beneficiaries).

       ``(4) Requirement of exhaustion.--
       ``(A) In general.--Except as provided in subparagraph (D), 
     paragraph (1) shall not apply in connection with any action 
     in connection with any denial of a claim for benefits of any 
     individual until all administrative processes under sections 
     102, 103, and 104 of the Patients' Bill of Rights Act of 2005 
     (if applicable) have been exhausted.
       ``(B) Late manifestation of injury.--
       ``(i) In general.--A participant or beneficiary shall not 
     be precluded from pursuing a review under section 104 of the 
     Patients' Bill of Rights Act of 2005 regarding an injury that 
     such participant or beneficiary has experienced if the 
     external review entity first determines that the injury of 
     such participant or beneficiary is a late manifestation of an 
     earlier injury.
       ``(ii) Definition.--In this subparagraph, the term `late 
     manifestation of an earlier injury' means an injury sustained 
     by the participant or beneficiary which was not known, and 
     should not have been known, by such participant or 
     beneficiary by the latest date that the requirements of 
     subparagraph (A) should have been met regarding the claim for 
     benefits which was denied.
       ``(C) Exception for needed care.--A participant or 
     beneficiary may seek relief exclusively in Federal court 
     under subsection 502(a)(1)(B) prior to the exhaustion of 
     administrative remedies under sections 102, 103, or 104 of 
     the Patients' Bill of Rights Act of 2005 (as required under 
     subparagraph (A)) if it is demonstrated to the court that the 
     exhaustion of such remedies would cause irreparable harm to 
     the health of the participant or beneficiary. Notwithstanding 
     the awarding of relief under subsection 502(a)(1)(B) pursuant 
     to this subparagraph, no relief shall be available as a 
     result of, or arising under, paragraph (1)(A) unless the 
     requirements of subparagraph (A) are met.
       ``(D) Failure to review.--
       ``(i) In general.--If the external review entity fails to 
     make a determination within the time required under section 
     104(e)(1)(A)(i) of the Patients' Bill of Rights Act of 2005, 
     subparagraph (A) shall not apply with respect to the action 
     after 10 additional days after the date on which such time 
     period has expired and the filing of such action shall not 
     affect the duty of the independent medical reviewer (or 
     reviewers) to make a determination pursuant to such section 
     104(e)(1)(A)(i).
       ``(ii) Expedited determination.--If the external review 
     entity fails to make a determination within the time required 
     under section 104(e)(1)(A)(ii) of the Patients' Bill of 
     Rights Act of 2005, subparagraph (A) shall not apply with 
     respect to the action and the filing of such an action shall 
     not affect the duty of the independent medical reviewer (or 
     reviewers) to make a determination pursuant to such section 
     104(e)(1)(A)(ii).
       ``(E) Receipt of benefits during appeals process.--Receipt 
     by the participant or beneficiary of the benefits involved in 
     the claim for benefits during the pendency of any 
     administrative processes referred to in subparagraph (A) or 
     the pendency of any action with respect to which, under this 
     paragraph, subparagraph (A) does not apply--
       ``(i) shall not preclude continuation of all such 
     administrative processes to their conclusion if so moved by 
     any party, and
       ``(ii) shall not preclude any liability under subsection 
     (a)(1)(C) and this subsection in connection with such claim.
       ``(F) Admissible.--Any determination made by a reviewer in 
     an administrative proceeding under section 104 of the 
     Patients' Bill of Rights Act of 2005 shall be admissible in 
     any Federal or State court proceeding and shall be presented 
     to the trier of fact.
       ``(5) Tolling provision.--The statute of limitations for 
     any cause of action arising under section 502(n) relating to 
     a denial of a claim for benefits that is the subject of an 
     action brought in State court shall be tolled until such time 
     as the State court makes a final disposition, including all 
     appeals, of whether such claim should properly be within the 
     jurisdiction of the State court. The tolling period shall be 
     determined by the applicable Federal or State law, whichever 
     period is greater.
       ``(6) Exclusion of directed recordkeepers.--
       ``(A) In general.--Subject to subparagraph (C), paragraph 
     (1) shall not apply with respect to any action against a 
     directed recordkeeper in connection with a group health plan.
       ``(B) Directed recordkeeper.--For purposes of this 
     paragraph, the term `directed recordkeeper' means, in 
     connection with a group health plan, a person engaged in 
     directed recordkeeping activities pursuant to the specific 
     instructions of the plan or the employer or other plan 
     sponsor, including the distribution of enrollment information 
     and distribution of disclosure materials under this Act or 
     title I of the Patients' Bill of Rights Act of 2005 and whose 
     duties do not include making decisions on claims for 
     benefits.
       ``(C) Limitation.--Subparagraph (A) does not apply in 
     connection with any directed recordkeeper to the extent that 
     the directed recordkeeper fails to follow the specific 
     instruction of the plan or the employer or other plan 
     sponsor.
       ``(7) Construction.--Nothing in this subsection shall be 
     construed as--
       ``(A) saving from preemption a cause of action under State 
     law for the failure to provide a benefit for an item or 
     service which is specifically excluded under the group health 
     plan involved, except to the extent that--
       ``(i) the application or interpretation of the exclusion 
     involves a determination described in section 104(d)(2) of 
     the Patients' Bill of Rights Act of 2005, or
       ``(ii) the provision of the benefit for the item or service 
     is required under Federal law or under applicable State law 
     consistent with subsection (b)(2)(B);

[[Page 9535]]

       ``(B) preempting a State law which requires an affidavit or 
     certificate of merit in a civil action;
       ``(C) affecting a cause of action or remedy under State law 
     in connection with the provision or arrangement of excepted 
     benefits (as defined in section 733(c)), other than those 
     described in section 733(c)(2)(A); or
       ``(D) affecting a cause of action under State law other 
     than a cause of action described in paragraph (1)(A).
       ``(8) Purchase of insurance to cover liability.--Nothing in 
     section 410 shall be construed to preclude the purchase by a 
     group health plan of insurance to cover any liability or 
     losses arising under a cause of action described in paragraph 
     (1)(A).
       ``(9) Relief from liability for employer or other plan 
     sponsor by means of designated decisionmaker.--
       ``(A) In general.--Paragraph (1) shall not apply with 
     respect to any cause of action described in paragraph (1)(A) 
     under State law insofar as such cause of action provides for 
     liability with respect to a participant or beneficiary of an 
     employer or plan sponsor (or an employee of such employer or 
     sponsor acting within the scope of employment), if with 
     respect to the employer or plan sponsor there is (or is 
     deemed under subparagraph (B) to be) a designated 
     decisionmaker that meets the requirements of section 
     502(o)(1) with respect to such participant or beneficiary. 
     Such paragraph (1) shall apply with respect to any cause of 
     action described in paragraph (1)(A) under State law against 
     the designated decisionmaker of such employer or other plan 
     sponsor with respect to the participant or beneficiary.
       ``(B) Automatic designation.--A health insurance issuer 
     shall be deemed to be a designated decisionmaker for purposes 
     of subparagraph (A) with respect to the participants and 
     beneficiaries of an employer or plan sponsor, whether or not 
     the employer or plan sponsor makes such a designation, and 
     shall be deemed to have assumed unconditionally all liability 
     of the employer or plan sponsor under such designation in 
     accordance with subsection (o), unless the employer or plan 
     sponsor affirmatively enters into a contract to prevent the 
     service of the designated decisionmaker.
       ``(C) Treatment of certain trust funds.--For purposes of 
     this paragraph, the terms `employer' and `plan sponsor', in 
     connection with the assumption by a designated decisionmaker 
     of the liability of employer or other plan sponsor pursuant 
     to this paragraph, shall be construed to include a trust fund 
     maintained pursuant to section 302 of the Labor Management 
     Relations Act, 1947 (29 U.S.C. 186) or the Railway Labor Act 
     (45 U.S.C. 151 et seq.).
       ``(10) Previously provided services.--
       ``(A) In general.--Except as provided in this paragraph, 
     paragraph (1) shall not apply with respect to a cause of 
     action where the denial involved relates to an item or 
     service that has already been fully provided to the 
     participant or beneficiary under the plan or coverage and the 
     claim relates solely to the subsequent denial of payment for 
     the provision of such item or service.
       ``(B) Exception.--Nothing in subparagraph (A) shall be 
     construed to--
       ``(i) exclude a cause of action from exemption under 
     paragraph (1) where the nonpayment involved results in the 
     participant or beneficiary being unable to receive further 
     items or services that are directly related to the item or 
     service involved in the denial referred to in subparagraph 
     (A) or that are part of a continuing treatment or series of 
     procedures;
       ``(ii) exclude a cause of action from exemption under 
     paragraph (1) relating to quality of care; or
       ``(iii) limit liability that otherwise would arise from the 
     provision of the item or services or the performance of a 
     medical procedure.
       ``(11) Exemption from personal liability for individual 
     members of boards of directors, joint boards of trustees, 
     etc.--Any individual who is--
       ``(A) a member of a board of directors of an employer or 
     plan sponsor; or
       ``(B) a member of an association, committee, employee 
     organization, joint board of trustees, or other similar group 
     of representatives of the entities that are the plan sponsor 
     of plan maintained by two or more employers and one or more 
     employee organizations;

     shall not be personally liable, by reason of the exemption of 
     a cause of action from preemption under this subsection, for 
     conduct that is within the scope of employment or of plan-
     related duties of the individuals unless the individual acts 
     in a fraudulent manner for personal enrichment.
       ``(12) Choice of law.--A cause of action exempted from 
     preemption under paragraph (1) shall be governed by the law 
     (including choice of law rules) of the State in which the 
     plaintiff resides.
       ``(13) Limitation on attorneys' fees.--
       ``(A) In general.--Notwithstanding any other provision of 
     law, or any arrangement, agreement, or contract regarding an 
     attorney's fee, the amount of an attorney's contingency fee 
     allowable for a cause of action exemption from preemption 
     under paragraph (1) shall not exceed \1/3\ of the total 
     amount of the plaintiff's recovery (not including the 
     reimbursement of actual out-of-pocket expenses of the 
     attorney).
       ``(B) Determination by court.--The last court in which the 
     action was pending upon the final disposition, including all 
     appeals, of the action may review the attorney's fee to 
     ensure that the fee is a reasonable one.
       ``(C) No preemption of state law.--Subparagraph (A) shall 
     not apply with respect to a cause of action that is brought 
     in a State that has a law or framework of laws with respect 
     to the amount of an attorney's contingency fee that may be 
     incurred for the representation of a participant or 
     beneficiary (or the estate of such participant or 
     beneficiary) who brings such a cause of action.
       ``(e) Rules of Construction Relating to Health Care.--
     Nothing in this title shall be construed as--
       ``(1) affecting any State law relating to the practice of 
     medicine or the provision of, or the failure to provide, 
     medical care, or affecting any action (whether the liability 
     is direct or vicarious) based upon such a State law,
       ``(2) superseding any State law permitted under section 
     152(b)(1)(A) of the Patients' Bill of Rights Act of 2005, or
       ``(3) affecting any applicable State law with respect to 
     limitations on monetary damages.
       ``(f) No Right of Action for Recovery, Indemnity, or 
     Contribution by Issuers Against Treating Health Care 
     Professionals and Treating Hospitals.--In the case of any 
     care provided, or any treatment decision made, by the 
     treating health care professional or the treating hospital of 
     a participant or beneficiary under a group health plan which 
     consists of medical care provided under such plan, any cause 
     of action under State law against the treating health care 
     professional or the treating hospital by the plan or a health 
     insurance issuer providing health insurance coverage in 
     connection with the plan for recovery, indemnity, or 
     contribution in connection with such care (or any medically 
     reviewable decision made in connection with such care) or 
     such treatment decision is superseded.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to acts and omissions (from which a cause of 
     action arises) occurring on or after the applicable effective 
     date under section 601.

     SEC. 403. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

       (a) In General.--Subpart C of part 7 of subtitle B of title 
     I of the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1191 et seq.) is amended by adding at the end the 
     following new section:

     ``SEC. 735. COOPERATION BETWEEN FEDERAL AND STATE 
                   AUTHORITIES.

       ``(a) Agreement With States.--A State may enter into an 
     agreement with the Secretary for the delegation to the State 
     of some or all of the Secretary's authority under this title 
     to enforce the requirements applicable under title I of the 
     Patients' Bill of Rights Act of 2005 with respect to health 
     insurance coverage offered by a health insurance issuer and 
     with respect to a group health plan that is a non-Federal 
     governmental plan.
       ``(b) Delegations.--Any department, agency, or 
     instrumentality of a State to which authority is delegated 
     pursuant to an agreement entered into under this section may, 
     if authorized under State law and to the extent consistent 
     with such agreement, exercise the powers of the Secretary 
     under this title which relate to such authority.''.
       (b) Clerical Amendment.--The table of contents of such Act 
     is amended by inserting after the item relating to section 
     734 the following new item:

``Sec. 735. Cooperation between Federal and State authorities''.

        TITLE V--AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986

        Subtitle A--Application of Patient Protection Provisions

     SEC. 501. APPLICATION TO GROUP HEALTH PLANS UNDER THE 
                   INTERNAL REVENUE CODE OF 1986.

       Subchapter B of chapter 100 of the Internal Revenue Code of 
     1986 is amended--
       (1) in the table of sections, by inserting after the item 
     relating to section 9812 the following new item:

``Sec. 9813. Standard relating to patients' bill of rights''; and

       (2) by inserting after section 9812 the following:

     ``SEC. 9813. STANDARD RELATING TO PATIENTS' BILL OF RIGHTS.

       ``A group health plan shall comply with the requirements of 
     title I of the Patients' Bill of Rights Act of 2005 (as in 
     effect as of the date of the enactment of such Act), and such 
     requirements shall be deemed to be incorporated into this 
     section.''.

     SEC. 502. CONFORMING ENFORCEMENT FOR WOMEN'S HEALTH AND 
                   CANCER RIGHTS.

       Subchapter B of chapter 100 of the Internal Revenue Code of 
     1986, as amended by section 501, is further amended--
       (1) in the table of sections, by inserting after the item 
     relating to section 9813 the following new item:

``Sec. 9814. Standard relating to women's health and cancer rights''; 
              and

       (2) by inserting after section 9813 the following:

[[Page 9536]]



     ``SEC. 9814. STANDARD RELATING TO WOMEN'S HEALTH AND CANCER 
                   RIGHTS.

       ``The provisions of section 713 of the Employee Retirement 
     Income Security Act of 1974 (as in effect as of the date of 
     the enactment of this section) shall apply to group health 
     plans as if included in this subchapter.''.

         Subtitle B--Health Care Coverage Access Tax Incentives

     SEC. 511. CREDIT FOR HEALTH INSURANCE EXPENSES OF SMALL 
                   BUSINESSES.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     business-related credits) is amended by adding at the end the 
     following:

     ``SEC. 45J. SMALL BUSINESS HEALTH INSURANCE EXPENSES.

       ``(a) General Rule.--For purposes of section 38, in the 
     case of a small employer, the health insurance credit 
     determined under this section for the taxable year is an 
     amount equal to the applicable percentage of the expenses 
     paid by the taxpayer during the taxable year for health 
     insurance coverage for such year provided under a new health 
     plan for employees of such employer.
       ``(b) Applicable Percentage.--For purposes of subsection 
     (a), the applicable percentage is--
       ``(1) in the case of insurance purchased as a member of a 
     qualified health benefit purchasing coalition (as defined in 
     section 9841), 30 percent, and
       ``(2) in the case of insurance not described in paragraph 
     (1), 20 percent.
       ``(c) Limitations.--
       ``(1) Per employee dollar limitation.--The amount of 
     expenses taken into account under subsection (a) with respect 
     to any employee for any taxable year shall not exceed--
       ``(A) $2,000 in the case of self-only coverage, and
       ``(B) $5,000 in the case of family coverage.
     In the case of an employee who is covered by a new health 
     plan of the employer for only a portion of such taxable year, 
     the limitation under the preceding sentence shall be an 
     amount which bears the same ratio to such limitation 
     (determined without regard to this sentence) as such portion 
     bears to the entire taxable year.
       ``(2) Period of coverage.--Expenses may be taken into 
     account under subsection (a) only with respect to coverage 
     for the 4-year period beginning on the date the employer 
     establishes a new health plan.
       ``(d) Definitions.--For purposes of this section--
       ``(1) Health insurance coverage.--The term `health 
     insurance coverage' has the meaning given such term by 
     section 9832(b)(1).
       ``(2) New health plan.--
       ``(A) In general.--The term `new health plan' means any 
     arrangement of the employer which provides health insurance 
     coverage to employees if--
       ``(i) such employer (and any predecessor employer) did not 
     establish or maintain such arrangement (or any similar 
     arrangement) at any time during the 2 taxable years ending 
     prior to the taxable year in which the credit under this 
     section is first allowed, and
       ``(ii) such arrangement provides health insurance coverage 
     to at least 70 percent of the qualified employees of such 
     employer.
       ``(B) Qualified employee.--
       ``(i) In general.--The term `qualified employee' means any 
     employee of an employer if the annual rate of such employee's 
     compensation (as defined in section 414(s)) exceeds $10,000.
       ``(ii) Treatment of certain employees.--The term `employee' 
     shall include a leased employee within the meaning of section 
     414(n).
       ``(3) Small employer.--The term `small employer' has the 
     meaning given to such term by section 4980D(d)(2); except 
     that only qualified employees shall be taken into account.
       ``(e) Special Rules.--
       ``(1) Certain rules made applicable.--For purposes of this 
     section, rules similar to the rules of section 52 shall 
     apply.
       ``(2) Amounts paid under salary reduction arrangements.--No 
     amount paid or incurred pursuant to a salary reduction 
     arrangement shall be taken into account under subsection (a).
       ``(f) Termination.--This section shall not apply to 
     expenses paid or incurred by an employer with respect to any 
     arrangement established on or after January 1, 2014.''.
       (b) Credit to Be Part of General Business Credit.--Section 
     38(b) of such Code (relating to current year business credit) 
     is amended by striking ``plus'' at the end of paragraph (18), 
     by striking the period at the end of paragraph (19) and 
     inserting ``, plus'', and by adding at the end the following:
       ``(20) in the case of a small employer (as defined in 
     section 45J(d)(3)), the health insurance credit determined 
     under section 45J(a).''.
       (c) Denial of Double Benefit.--Section 280C of such Code is 
     amended by adding at the end the following new subsection:
       ``(e) Credit for Small Business Health Insurance 
     Expenses.--
       ``(1) In general.--No deduction shall be allowed for that 
     portion of the expenses (otherwise allowable as a deduction) 
     taken into account in determining the credit under section 
     45J for the taxable year which is equal to the amount of the 
     credit determined for such taxable year under section 45J(a).
       ``(2) Controlled groups.--Persons treated as a single 
     employer under subsection (a) or (b) of section 52 shall be 
     treated as 1 person for purposes of this section.''.
       (d) Clerical Amendment.--The table of sections for subpart 
     D of part IV of subchapter A of chapter 1 of such Code is 
     amended by adding at the end the following:

``Sec. 45J. Small business health insurance expenses''.

       (e) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred in taxable years 
     beginning after December 31, 2006, for arrangements 
     established after the date of the enactment of this Act.

     SEC. 512. CERTAIN GRANTS BY PRIVATE FOUNDATIONS TO QUALIFIED 
                   HEALTH BENEFIT PURCHASING COALITIONS.

       (a) In General.--Section 4942 of the Internal Revenue Code 
     of 1986 (relating to taxes on failure to distribute income) 
     is amended by adding at the end the following:
       ``(k) Certain Qualified Health Benefit Purchasing Coalition 
     Distributions.--
       ``(1) In general.--For purposes of subsection (g), sections 
     170, 501, 507, 509, and 2522, and this chapter, a qualified 
     health benefit purchasing coalition distribution by a private 
     foundation shall be considered to be a distribution for a 
     charitable purpose.
       ``(2) Qualified health benefit purchasing coalition 
     distribution.--For purposes of paragraph (1)--
       ``(A) In general.--The term `qualified health benefit 
     purchasing coalition distribution' means any amount paid or 
     incurred by a private foundation to or on behalf of a 
     qualified health benefit purchasing coalition (as defined in 
     section 9841) for purposes of payment or reimbursement of 
     amounts paid or incurred in connection with the establishment 
     and maintenance of such coalition.
       ``(B) Exclusions.--Such term shall not include any amount 
     used by a qualified health benefit purchasing coalition (as 
     so defined)--
       ``(i) for the purchase of real property,
       ``(ii) as payment to, or for the benefit of, members (or 
     employees or affiliates of such members) of such coalition, 
     or
       ``(iii) for any expense paid or incurred more than 48 
     months after the date of establishment of such coalition.
       ``(3) Termination.--This subsection shall not apply--
       ``(A) to qualified health benefit purchasing coalition 
     distributions paid or incurred after December 31, 2013, and
       ``(B) with respect to start-up costs of a coalition which 
     are paid or incurred after December 31, 2014.''.
       (b) Qualified Health Benefit Purchasing Coalition.--
       (1) In general.--Chapter 100 of such Code (relating to 
     group health plan requirements) is amended by adding at the 
     end the following new subchapter:

     ``Subchapter D--Qualified Health Benefit Purchasing Coalition

``Sec. 9841. Qualified health benefit purchasing coalition.

     ``SEC. 9841. QUALIFIED HEALTH BENEFIT PURCHASING COALITION.

       ``(a) In General.--A qualified health benefit purchasing 
     coalition is a private not-for-profit corporation which--
       ``(1) sells health insurance through State licensed health 
     insurance issuers in the State in which the employers to 
     which such coalition is providing insurance are located, and
       ``(2) establishes to the Secretary, under State 
     certification procedures or other procedures as the Secretary 
     may provide by regulation, that such coalition meets the 
     requirements of this section.
       ``(b) Board of Directors.--
       ``(1) In general.--Each purchasing coalition under this 
     section shall be governed by a Board of Directors.
       ``(2) Election.--The Secretary shall establish procedures 
     governing election of such Board.
       ``(3) Membership.--The Board of Directors shall--
       ``(A) be composed of representatives of the members of the 
     coalition, in equal number, including small employers and 
     employee representatives of such employers, but
       ``(B) not include other interested parties, such as service 
     providers, health insurers, or insurance agents or brokers 
     which may have a conflict of interest with the purposes of 
     the coalition.
       ``(c) Membership of Coalition.--
       ``(1) In general.--A purchasing coalition shall accept all 
     small employers residing within the area served by the 
     coalition as members if such employers request such 
     membership.
       ``(2) Other members.--The coalition, at the discretion of 
     its Board of Directors, may be open to individuals and large 
     employers.
       ``(3) Voting.--Members of a purchasing coalition shall have 
     voting rights consistent with the rules established by the 
     State.
       ``(d) Duties of Purchasing Coalitions.--Each purchasing 
     coalition shall--
       ``(1) enter into agreements with small employers (and, at 
     the discretion of its Board, with individuals and other 
     employers) to provide health insurance benefits to employees 
     and retirees of such employers,

[[Page 9537]]

       ``(2) where feasible, enter into agreements with 3 or more 
     unaffiliated, qualified licensed health plans, to offer 
     benefits to members,
       ``(3) offer to members at least 1 open enrollment period of 
     at least 30 days per calendar year,
       ``(4) serve a significant geographical area and market to 
     all eligible members in that area, and
       ``(5) carry out other functions provided for under this 
     section.
       ``(e) Limitation on Activities.--A purchasing coalition 
     shall not--
       ``(1) perform any activity (including certification or 
     enforcement) relating to compliance or licensing of health 
     plans,
       ``(2) assume insurance or financial risk in relation to any 
     health plan, or
       ``(3) perform other activities identified by the State as 
     being inconsistent with the performance of its duties under 
     this section.
       ``(f) Additional Requirements for Purchasing Coalitions.--
     As provided by the Secretary in regulations, a purchasing 
     coalition shall be subject to requirements similar to the 
     requirements of a group health plan under this chapter.
       ``(g) Relation to Other Laws.--
       ``(1) Preemption of state fictitious group laws.--
     Requirements (commonly referred to as fictitious group laws) 
     relating to grouping and similar requirements for health 
     insurance coverage are preempted to the extent such 
     requirements impede the establishment and operation of 
     qualified health benefit purchasing coalitions.
       ``(2) Allowing savings to be passed through.--Any State law 
     that prohibits health insurance issuers from reducing 
     premiums on health insurance coverage sold through a 
     qualified health benefit purchasing coalition to reflect 
     administrative savings is preempted. This paragraph shall not 
     be construed to preempt State laws that impose restrictions 
     on premiums based on health status, claims history, industry, 
     age, gender, or other underwriting factors.
       ``(3) No waiver of hipaa requirements.--Nothing in this 
     section shall be construed to change the obligation of health 
     insurance issuers to comply with the requirements of title 
     XXVII of the Public Health Service Act with respect to health 
     insurance coverage offered to small employers in the small 
     group market through a qualified health benefit purchasing 
     coalition.
       ``(h) Definition of Small Employer.--For purposes of this 
     section--
       ``(1) In general.--The term `small employer' means, with 
     respect to any calendar year, any employer if such employer 
     employed an average of at least 2 and not more than 50 
     qualified employees on business days during either of the 2 
     preceding calendar years. For purposes of the preceding 
     sentence, a preceding calendar year may be taken into account 
     only if the employer was in existence throughout such year.
       ``(2) Employers not in existence in preceding year.--In the 
     case of an employer which was not in existence throughout the 
     1st preceding calendar year, the determination under 
     paragraph (1) shall be based on the average number of 
     qualified employees that it is reasonably expected such 
     employer will employ on business days in the current calendar 
     year.''.
       (2) Conforming amendment.--The table of subchapters for 
     chapter 100 of such Code is amended by adding at the end the 
     following item:

    ``Subchapter D--Qualified Health Benefit Purchasing Coalition''.

       (c) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 513. STATE GRANT PROGRAM FOR MARKET INNOVATION.

       (a) In General.--The Secretary of Health and Human Services 
     (in this section referred to as the ``Secretary'') shall 
     establish a program (in this section referred to as the 
     ``program'') to award demonstration grants under this section 
     to States to allow States to demonstrate the effectiveness of 
     innovative ways to increase access to health insurance 
     through market reforms and other innovative means. Such 
     innovative means may include (and are not limited to) any of 
     the following:
       (1) Alternative group purchasing or pooling arrangements, 
     such as purchasing cooperatives for small businesses, 
     reinsurance pools, or high risk pools.
       (2) Individual or small group market reforms.
       (3) Consumer education and outreach.
       (4) Subsidies to individuals, employers, or both, in 
     obtaining health insurance.
       (b) Scope; Duration.--The program shall be limited to not 
     more than 10 States and to a total period of 5 years, 
     beginning on the date the first demonstration grant is made.
       (c) Conditions for Demonstration Grants.--
       (1) In general.--The Secretary may not provide for a 
     demonstration grant to a State under the program unless the 
     Secretary finds that under the proposed demonstration grant--
       (A) the State will provide for demonstrated increase of 
     access for some portion of the existing uninsured population 
     through a market innovation (other than merely through a 
     financial expansion of a program initiated before the date of 
     the enactment of this Act);
       (B) the State will comply with applicable Federal laws;
       (C) the State will not discriminate among participants on 
     the basis of any health status-related factor (as defined in 
     section 2791(d)(9) of the Public Health Service Act), except 
     to the extent a State wishes to focus on populations that 
     otherwise would not obtain health insurance because of such 
     factors; and
       (D) the State will provide for such evaluation, in 
     coordination with the evaluation required under subsection 
     (d), as the Secretary may specify.
       (2) Application.--The Secretary shall not provide a 
     demonstration grant under the program to a State unless--
       (A) the State submits to the Secretary such an application, 
     in such a form and manner, as the Secretary specifies;
       (B) the application includes information regarding how the 
     demonstration grant will address issues such as governance, 
     targeted population, expected cost, and the continuation 
     after the completion of the demonstration grant period; and
       (C) the Secretary determines that the demonstration grant 
     will be used consistent with this section.
       (3) Focus.--A demonstration grant proposal under section 
     need not cover all uninsured individuals in a State or all 
     health care benefits with respect to such individuals.
       (d) Evaluation.--The Secretary shall enter into a contract 
     with an appropriate entity outside the Department of Health 
     and Human Services to conduct an overall evaluation of the 
     program at the end of the program period. Such evaluation 
     shall include an analysis of improvements in access, costs, 
     quality of care, or choice of coverage, under different 
     demonstration grants.
       (e) Option to Provide for Initial Planning Grants.--
     Notwithstanding the previous provisions of this section, 
     under the program the Secretary may provide for a portion of 
     the amounts appropriated under subsection (f) (not to exceed 
     $5,000,000) to be made available to any State for initial 
     planning grants to permit States to develop demonstration 
     grant proposals under the previous provisions of this 
     section.
       (f) Authorization of Appropriations.--There are authorized 
     to be appropriated $100,000,000 for each fiscal year to carry 
     out this section. Amounts appropriated under this subsection 
     shall remain available until expended.
       (g) State Defined.--For purposes of this section, the term 
     ``State'' has the meaning given such term for purposes of 
     title XIX of the Social Security Act.

     SEC. 514. GRANT PROGRAM TO FACILITATE HEALTH BENEFITS 
                   INFORMATION FOR SMALL EMPLOYERS.

       (a) In General.--The Small Business Administration shall 
     award grants to 1 or more States, local governments, and non-
     profit organizations for the purposes of--
       (1) demonstrating new and effective ways to provide 
     information about the benefits of health insurance to small 
     employers, including tax benefits, increased productivity of 
     employees, and decreased turnover of employees,
       (2) making employers aware of their current rights in the 
     marketplace under State and Federal health insurance reforms, 
     and
       (3) making employers aware of the tax treatment of 
     insurance premiums.
       (b) Authorization.--There is authorized to be appropriated 
     $10,000,000 for each of the first 5 fiscal years beginning 
     after the date of the enactment of this Act for grants under 
     subsection (a).

     SEC. 515. STATE GRANT PROGRAM FOR MARKET INNOVATION.

       (a) In General.--The Secretary of Health and Human Services 
     (in this section referred to as the ``Secretary'') shall 
     establish a program (in this section referred to as the 
     ``program'') to award demonstration grants under this section 
     to States to allow States to demonstrate the effectiveness of 
     innovative ways to increase access to health insurance 
     through market reforms and other innovative means. Such 
     innovative means may include (and are not limited to) any of 
     the following:
       (1) Alternative group purchasing or pooling arrangements, 
     such as purchasing cooperatives for small businesses, 
     reinsurance pools, or high risk pools.
       (2) Individual or small group market reforms.
       (3) Consumer education and outreach.
       (4) Subsidies to individuals, employers, or both, in 
     obtaining health insurance.
       (b) Scope; Duration.--The program shall be limited to not 
     more than 10 States and to a total period of 5 years, 
     beginning on the date the first demonstration grant is made.
       (c) Conditions for Demonstration Grants.--
       (1) In general.--The Secretary may not provide for a 
     demonstration grant to a State under the program unless the 
     Secretary finds that under the proposed demonstration grant--
       (A) the State will provide for demonstrated increase of 
     access for some portion of the existing uninsured population 
     through a market innovation (other than merely through a

[[Page 9538]]

     financial expansion of a program initiated before the date of 
     the enactment of this Act);
       (B) the State will comply with applicable Federal laws;
       (C) the State will not discriminate among participants on 
     the basis of any health status-related factor (as defined in 
     section 2791(d)(9) of the Public Health Service Act), except 
     to the extent a State wishes to focus on populations that 
     otherwise would not obtain health insurance because of such 
     factors; and
       (D) the State will provide for such evaluation, in 
     coordination with the evaluation required under subsection 
     (d), as the Secretary may specify.
       (2) Application.--The Secretary shall not provide a 
     demonstration grant under the program to a State unless--
       (A) the State submits to the Secretary such an application, 
     in such a form and manner, as the Secretary specifies;
       (B) the application includes information regarding how the 
     demonstration grant will address issues such as governance, 
     targeted population, expected cost, and the continuation 
     after the completion of the demonstration grant period; and
       (C) the Secretary determines that the demonstration grant 
     will be used consistent with this section.
       (3) Focus.--A demonstration grant proposal under section 
     need not cover all uninsured individuals in a State or all 
     health care benefits with respect to such individuals.
       (d) Evaluation.--The Secretary shall enter into a contract 
     with an appropriate entity outside the Department of Health 
     and Human Services to conduct an overall evaluation of the 
     program at the end of the program period. Such evaluation 
     shall include an analysis of improvements in access, costs, 
     quality of care, or choice of coverage, under different 
     demonstration grants.
       (e) Option to Provide for Initial Planning Grants.--
     Notwithstanding the previous provisions of this section, 
     under the program the Secretary may provide for a portion of 
     the amounts appropriated under subsection (f) (not to exceed 
     $5,000,000) to be made available to any State for initial 
     planning grants to permit States to develop demonstration 
     grant proposals under the previous provisions of this 
     section.
       (f) Authorization of Appropriations.--There are authorized 
     to be appropriated $100,000,000 for each fiscal year to carry 
     out this section. Amounts appropriated under this subsection 
     shall remain available until expended.
       (g) State Defined.--For purposes of this section, the term 
     ``State'' has the meaning given such term for purposes of 
     title XIX of the Social Security Act.

       TITLE VI--EFFECTIVE DATES; COORDINATION IN IMPLEMENTATION

     SEC. 601. EFFECTIVE DATES.

       (a) Group Health Coverage.--
       (1) In general.--Subject to paragraph (2) and subsection 
     (d), the amendments made by sections 201(a), 401, 501, and 
     502 (and title I insofar as it relates to such sections) 
     shall apply with respect to group health plans, and health 
     insurance coverage offered in connection with group health 
     plans, for plan years beginning on or after October 1, 2006 
     (in this section referred to as the ``general effective 
     date'').
       (2) Treatment of collective bargaining agreements.--In the 
     case of a group health plan maintained pursuant to one or 
     more collective bargaining agreements between employee 
     representatives and one or more employers ratified before the 
     date of the enactment of this Act, the amendments made by 
     sections 201(a), 401, 501, and 502 (and title I insofar as it 
     relates to such sections) shall not apply to plan years 
     beginning before the later of--
       (A) the date on which the last collective bargaining 
     agreements relating to the plan terminates (excluding any 
     extension thereof agreed to after the date of the enactment 
     of this Act); or
       (B) the general effective date;

     but shall apply not later than 1 year after the general 
     effective date. For purposes of subparagraph (A), any plan 
     amendment made pursuant to a collective bargaining agreement 
     relating to the plan which amends the plan solely to conform 
     to any requirement added by this Act shall not be treated as 
     a termination of such collective bargaining agreement.
       (b) Individual Health Insurance Coverage.--Subject to 
     subsection (d), the amendments made by section 202 shall 
     apply with respect to individual health insurance coverage 
     offered, sold, issued, renewed, in effect, or operated in the 
     individual market on or after the general effective date.
       (c) Treatment of Religious Nonmedical Providers.--
       (1) In general.--Nothing in this Act (or the amendments 
     made thereby) shall be construed to--
       (A) restrict or limit the right of group health plans, and 
     of health insurance issuers offering health insurance 
     coverage, to include as providers religious nonmedical 
     providers;
       (B) require such plans or issuers to--
       (i) utilize medically based eligibility standards or 
     criteria in deciding provider status of religious nonmedical 
     providers;
       (ii) use medical professionals or criteria to decide 
     patient access to religious nonmedical providers;
       (iii) utilize medical professionals or criteria in making 
     decisions in internal or external appeals regarding coverage 
     for care by religious nonmedical providers; or
       (iv) compel a participant or beneficiary to undergo a 
     medical examination or test as a condition of receiving 
     health insurance coverage for treatment by a religious 
     nonmedical provider; or
       (C) require such plans or issuers to exclude religious 
     nonmedical providers because they do not provide medical or 
     other required data, if such data is inconsistent with the 
     religious nonmedical treatment or nursing care provided by 
     the provider.
       (2) Religious nonmedical provider.--For purposes of this 
     subsection, the term ``religious nonmedical provider'' means 
     a provider who provides no medical care but who provides only 
     religious nonmedical treatment or religious nonmedical 
     nursing care.
       (d) Transition for Notice Requirement.--The disclosure of 
     information required under section 121 of this Act shall 
     first be provided pursuant to--
       (1) subsection (a) with respect to a group health plan that 
     is maintained as of the general effective date, not later 
     than 30 days before the beginning of the first plan year to 
     which title I applies in connection with the plan under such 
     subsection; or
       (2) subsection (b) with respect to an individual health 
     insurance coverage that is in effect as of the general 
     effective date, not later than 30 days before the first date 
     as of which title I applies to the coverage under such 
     subsection.

     SEC. 602. COORDINATION IN IMPLEMENTATION.

       The Secretary of Labor and the Secretary of Health and 
     Human Services shall ensure, through the execution of an 
     interagency memorandum of understanding among such 
     Secretaries, that--
       (1) regulations, rulings, and interpretations issued by 
     such Secretaries relating to the same matter over which such 
     Secretaries have responsibility under the provisions of this 
     Act (and the amendments made thereby) are administered so as 
     to have the same effect at all times; and
       (2) coordination of policies relating to enforcing the same 
     requirements through such Secretaries in order to have a 
     coordinated enforcement strategy that avoids duplication of 
     enforcement efforts and assigns priorities in enforcement.

     SEC. 603. SEVERABILITY.

       If any provision of this Act, an amendment made by this 
     Act, or the application of such provision or amendment to any 
     person or circumstance is held to be unconstitutional, the 
     remainder of this Act, the amendments made by this Act, and 
     the application of the provisions of such to any person or 
     circumstance shall not be affected thereby.

                  TITLE VII--MISCELLANEOUS PROVISIONS

     SEC. 701. NO IMPACT ON SOCIAL SECURITY TRUST FUND.

       (a) In General.--Nothing in this Act (or an amendment made 
     by this Act) shall be construed to alter or amend the Social 
     Security Act (or any regulation promulgated under that Act).
       (b) Transfers.--
       (1) Estimate of secretary.--The Secretary of the Treasury 
     shall annually estimate the impact that the enactment of this 
     Act has on the income and balances of the trust funds 
     established under section 201 of the Social Security Act (42 
     U.S.C. 401).
       (2) Transfer of funds.--If, under paragraph (1), the 
     Secretary of the Treasury estimates that the enactment of 
     this Act has a negative impact on the income and balances of 
     the trust funds established under section 201 of the Social 
     Security Act (42 U.S.C. 401), the Secretary shall transfer, 
     not less frequently than quarterly, from the general revenues 
     of the Federal Government an amount sufficient so as to 
     ensure that the income and balances of such trust funds are 
     not reduced as a result of the enactment of such Act.
                                 ______
                                 
      By Mrs. FEINSTEIN (for herself, Mr. Cornyn, Mr. Lautenberg, Mrs. 
        Hutchison, Mrs. Boxer, Mr. Corzine, Mr. Schumer, Mrs. Clinton, 
        Mr. Nelson of Florida, and Mr. Kennedy):
  S. 1013. A bill to improve the allocation of grants through the 
Department of Homeland Security, and for other purposes; to the 
Committee on Homeland Security and Governmental Affairs.
  Mrs. FEINSTEIN. Mr. President, I rise today to introduce the Homeland 
Security FORWARD Funding Act of 2005. I am pleased to be joined by my 
colleague from Texas, Senator John Cornyn, as well as Senators 
Lautenberg, Hutchison, Boxer, Corzine, Schumer, Clinton and Senator 
Nelson of Florida.
  It is time that Congress ensures that funding to bolster the security 
of our nation goes to where the threat is the greatest.
  Unfortunately, billions of dollars in homeland security funds to 
states and

[[Page 9539]]

local communities--including $3.6 billion in fiscal year 2005--are now 
being distributed to areas that are not at the greatest risk of 
terrorist attack.
  To do this, we need to adopt risk-based analysis to determine where 
our homeland security funding goes, rather than continue with the 
present system of ad hoc determinations, ``small-state minimums'' and 
poorly understood decision-making, that leave some targets exposed to 
threats while sending resources to places where there is little chance 
of terrorist attack.
  This legislation will ensure that priorities are set according to 
analysis of risk and threat. Specifically it directs the Secretary of 
Homeland Security to allocate funding to homeland security grants based 
on risk analysis.
  This is the core of the bill, and I believe it is so important that I 
will quote in full the operative language, which appears in the very 
first substantive section of the legislation: ``The Secretary shall 
ensure that homeland security grants are allocated based on an 
assessment of threat, vulnerability, and consequence to the maximum 
extent practicable.''
  This direction covers the four major first-responder grant programs 
administered by Department of Homeland Security in addition to grants 
for seaport and airport security--called ``covered grants'' in the 
bill, including: 1. The State Homeland Security Grant Program; 2. The 
Urban Area Security Initiative; 3. The Law Enforcement Terrorism 
Prevention Program; and 4. The Citizens Corps Program.
  Reduces the ``small state minimum'' to 25 percent per State. Current 
practice requires each state to get .75 percent of much of the grant 
funding. That means 37.5 percent of the funds are marked for 
distribution before any risk analysis.
  Requires grants be designed to meet ``essential capabilities.'' 
Essential capabilities are what we get for the money spent--the ability 
to address the risk by reducing vulnerability to attack and by 
diminishing the consequences of such an attack by effective response.
  Ensures that States quickly and effectively pass on Federal funds to 
where they are needed so that Federal funds are not held back.
  The bottom line is this: if Federal funds are going to be distributed 
to improve our national ability to ``prevent, prepare for, respond to, 
or mitigate threatened or actual terrorist attacks,'' those funds 
should be distributed in accordance with a risk-based analysis.
  In this post-Cold War world of asymmetric threat there are two 
fundamental principles we should apply to efforts to make our nation 
more secure against a terrorist attack: the first is that understanding 
and predicting what terrorists will do requires risk analysis.
  It is an uncomfortable fact that, even with the best intelligence, we 
will never know exactly how, when and where terrorists will strike--the 
best we can do is try to assess risks and threats, and make 
predictions.
  The second principle is that our defense resources are finite.
  The total amount of money, time and personnel that can be devoted to 
homeland security is limited. That means tough choices have to be made 
by both the Congress, and by Executive Branch officials at the Federal, 
State and Local level.
  Together these two principles define what we need to do for our 
Nation: accurately assess the risks of an array of possible terrorist 
attacks; measure the vulnerability of all of these possible targets, 
and then allocate our resources based on that assessment.
  Three years ago, we created the Department of Homeland Security in an 
effort to create an institution that could perform this task.
  The core element of the new Department was to be the Information 
Assessment and Infrastructure Protection Directorate, which would 
``merge under one roof the capability to identify and assess current 
and future threats to the homeland, map those threats against our 
vulnerabilities, issue timely warnings and take preventive and 
protective action.''
  We are failing in this effort.
  The 9/11 Commission agreed, finding that ``nothing has been harder 
for officials--executive or legislative than to set priorities, making 
hard choices in allocating limited resources.''
  The Commission concluded, ``Homeland security assistance should be 
based strictly on an assessment of risks and vulnerabilities.''
  This bill does just that.
  The New York Times, an editorial published last month, titled ``Real 
Security, or Politics as Usual?'' agreed:

       Any terrorist who has followed how domestic security money 
     is distributed in this country must be encouraged by the 
     government's ineptness . . . The current formula is based in 
     part on population, rather than risk, and contains state 
     minimums, so even sparsely populated states that hardly have 
     a plausible terrorism target are raking in money. This is the 
     formula that gave Wyoming seven times more domestic security 
     money per capita than New York . . . If there were a 
     successful attack on Wall Street or the ports of Los Angeles 
     and Long Beach, it would be a blow to the whole nation. 
     Defending places where the terrorist threat is greatest is 
     not parochialism; it is defending America.

  Despite these recommendations, we find again and again that scarce 
resources are allocated based on factors unrelated to real security.
  For instance, Congress has established a ``small State minimum'' 
designed to ensure that every State gets a substantial portion of 
scarce resources, regardless of the measure of risk or vulnerability.
  As a result, in fiscal year 2004 Wyoming spent $37.52 per capita with 
homeland security grants, while California and Texas spent $8.75 and 
$6.93 respectively.
  The problem is not just in Congress. For example, a recent Department 
of Homeland Security Inspector General's report found that in the 
critical area of port security, grants are ``not well coordinated with 
the Information Analysis and Infrastructure Protection.''
  The result is the ``funding of projects with low [risk and 
vulnerability] scores.''
  A recently issued report from the Center for Security Studies and the 
Heritage Foundation found that there is:

     no funding formula that is based on risk analysis and 
     divorced from politics . . . [w]ith only limited resources 
     available to achieve the almost limitless goal of protecting 
     the entire United States . . . it is critical that we set 
     priorities.

  This bill is a first step to reducing threats of terrorist attack, 
but Congress can not do it alone.
  The Department of Homeland Security must embrace not only the concept 
of risk-based allocation, but also the practical aspects of the 
discipline. That means improving the intelligence analysis and 
vulnerability assessment functions of the Department.
  We also need to follow through on last year's intelligence reform 
efforts, since the product of the Intelligence Community--analysis of 
the plans, intentions and capabilities of terrorist groups--is the key 
element in an effective risk analysis.
  This will not be easy. There are lots of vested interests who will 
oppose such efforts. But our nation's safety is at sake. It is time to 
put aside pork-barrel politics and a Cold War mentality and get to 
work.
  Last year Representatives Cox and Turner, the Chair and Ranking 
Member, respectively, of the other body's Homeland Security Committee 
put forth similar legislation.
  That effort passed the House of Representatives as part of the 
Intelligence Reform Bill, but was dropped at conference--that bill has 
been reintroduced, and is scheduled for consideration on the floor of 
the House this week.
  This bill is based on Chairman Cox's efforts, and with a few 
exceptions tracks it closely.
  However, unlike the House bill, this bill makes an across-the-board 
reduction of the small-State minimum to .25 percent--the House bill 
retains a sliding scale that I believe will have the effect of 
undercutting its risk-based approach.
  In this body, Senators Collins and Lieberman have been working to 
craft risk-based legislation, which was recently reported favorably by 
the Senate Homeland Security Committee.

[[Page 9540]]

  I hope that the bill introduced today will be accepted by Senators 
Collins and Lieberman in the spirit in which it was drafted--as a 
reasoned alternative to their approach, and as a starting point for 
further discussions.
  It is my hope that Congress will act quickly to pass this 
legislation. We cannot afford to wait until it is too late.
  Mr. CORNYN. Mr. President, I rise today to join with my colleague, 
Senator Dianne Feinstein of California and other of our distinguished 
colleagues in introducing The Homeland Security FORWARD Funding Act of 
2005.
  I would like to thank Senator Feinstein for her collaboration in 
crafting this legislation. I know that she has thoughtfully examined 
the current state of our Homeland Security Funding and the many other 
interrelated issues, and I thank her for her fine leadership as we work 
together exploring ways to better protect our country.
  We say it often, and it is true: ``9/11 changed everything.'' The 
attacks of that day were unprecedented in our history, and they brought 
with them the need for similarly unprecedented security measures. In an 
effort to respond quickly to the devastation that was wrought upon our 
country, the Federal Government created a system that worked to raise 
overall national emergency preparedness to ensure we could better guard 
against another such terrorist attack.
  And so we embarked on the task of shoring up our airline, 
transportation, border, and port security. We worked to protect our 
critical infrastructure, to protect our cyber security, our agriculture 
and food supply systems.
  But taxpayer dollars are not limitless, and Congress must work to 
ensure every penny be directed where it will do the most good. It is 
imperative that we guard the places across our nation where terrorists 
may strike and where such strikes could do the most damage to our 
people, our government, and our national economy. We believe this is 
the most responsible way to prepare for any future terrorist attack.
  We need to have a system that will protect our most vulnerable 
population centers, and that recognizes the need to protect the 
critical infrastructure and vital components of our national economy. I 
am reminded of a recent tour I took of several Texas seaports. I 
visited with port directors, industry leaders, and emergency responders 
in and around the ports of Houston, Beaumont, and Corpus Christi. They 
have enormous security needs and the consequences of a terrorist attack 
on any of these facilities would be devastating, not only to the local 
communities, but to the economic engine of the whole country.
  The legislation that Senator Feinstein and I now propose would 
require that Federal Homeland Security funds be allocated to states 
according to a risk-based assessment. It is vital that we better 
allocate our limited resources to the vulnerable places in the country 
we most need to protect, and that that these funds are distributed in 
an efficient and timely manner.
  Senator Feinstein and I have evaluated the 9/11 Commission 
recommendations that call for allocation of money based on 
vulnerabilities, and our legislation provides for a distribution 
formula for homeland security grants based on three main criteria: 
Threat, vulnerability, and consequence. This would require states to 
quickly pass on federal funds to where they are most needed. This bill 
is inspired by the hard work and examination done on this issue by our 
colleagues in the House and Senate. We have also taken input from 
stakeholders in our respective States and from across the country. It 
is our hope and intention that by introducing this bill we can 
contribute and enrich the public discourse on this critical issue and 
help move the Nation toward a more rational and effective distribution 
of our homeland security resources.
  Key provisions of this bill include: establishing a First Responder 
Grant Board, consisting of Department of Homeland Security leadership, 
that will rank and prioritize grant applications based on threat and 
vulnerability. Enabling a region that encompasses more than one State 
to apply for funds. The money would still pass through the States, but 
would go to the region to better enable coordination and planning. 
Provides greater flexibility in using the funds, allowing a State to 
use them for other hazards consistent with federally established 
capability standards. And it allows States to retain authority to 
administer grant programs, but there are penalties for States that do 
not pass funds to local governments within 45 days, and if a State 
fails to pass the funds through, local governments may petition the 
Department of Homeland Security to receive the funds directly.
  Continuing to spread Homeland Security funds throughout the Nation 
irrespective of the actual risk to particular States and communities 
would be to ignore much of what we have learned as part of our effort 
to assess our vulnerabilities since the attacks of September 11. So I 
would urge that we swiftly work to pass this legislation, to better 
ensure the safety of our citizens.
                                 ______
                                 
      By Ms. SNOWE:
  S. 1014. A bill to provide additional relief for small business 
owners ordered to active duty as members of reserve components of the 
Armed Forces, and for other purposes; to the Committee on Small 
Business and Entrepreneurship.
  Ms. SNOWE. Mr. President, I rise today to offer the Supporting Our 
Patriotic Businesses Act. This bill addresses some key concerns I have 
regarding the impact that military call-ups have on our Nation's small 
businesses.
  Today, I am offering my legislation in conjunction with the release 
of a Congressional Budget Office Report entitled ``The Impact of 
Reserve Call-ups on Civilian Employers.'' I commissioned the Report a 
year and a half ago, because I believed then, as I do now, that our 
country is not doing enough for the patriotic small businesses that are 
owned by or employ our Guard and Reserve members; and which are 
negatively effected when these workers are called up in defense of our 
Nation.
  Although I am still analyzing the Report, three key findings 
immediately caught my attention. For instance, the Report concludes 
that: 1. Thirty-five percent of Guard and Reserve members work for 
small businesses or are self-employed, twenty-six percent work for 
large businesses, thirty-six percent work for the government, Federal, 
State, or local, and the remainder work for non-profit organizations. 
Therefore, the majority of non-government employed Guard and Reserve 
members are either self-employed, or work for small businesses. 2. Over 
the past decade, the military has dramatically increased its reliance 
on Guard and Reserve forces. This trend has accelerated since the 
terrorism attacks of September 11, 2001. Guard and Reserve members make 
up about thirty-three percent of deployed service members supporting 
operations in Iraq and Afghanistan. 3. I am particularly troubled by a 
third finding which confirms what I have feared all along--that the 
self-employed, and the small businesses that employ Guard and Reserve 
members, may be ``paying'' a disproportionate and unfair share of the 
burden of increased Guard and Reserve member call-ups. The burden is 
further magnified when it is the small business owner, or a key 
employee, who is deployed.
  As members of this institution charged with the duty of preserving 
the public trust, we should work together, on a bipartisan basis, to 
help diminish the unfair burden these employers and self-employed 
businesses shoulder.
  It is difficult enough to leave friends and family behind and enter 
harm's way, but asking our military personnel to also jeopardize their 
livelihood is unconscionable. By assisting these businesses and the 
self-employed, we are helping to diminish important concerns of our 
military personnel, improving their morale and positively affecting 
retention.
  The legislation that I offer today contains multiple provisions in 
support of self-employed Guard and Reserve members and the patriotic 
businesses that employ Guard and Reserve members.

[[Page 9541]]

  First, it authorizes increased appropriations for the Small Business 
Administration's (SBA) Office of Veteran Business Development, which 
offers vital services to our Nation's small businesses that are owned 
or employ our veterans. For instance, the office has prepared and 
distributed pre- and post-mobilization packets for small businesses, 
offers loans, and provides targeted business advice to meet the needs 
of our veterans and small businesses.
  My bill permanently extends the authority and duties of the SBA's 
Advisory Committee on Veterans Business Affairs, which has served as an 
invaluable independent source of advice and policy on veterans' 
business issues.
  My legislation provides that a service member does not need to 
satisfy any continuing education requirements, imposed with respect to 
their profession or occupation, while they are called up, or within the 
120-day period after they are released from the call-up.
  I have also included a provision which amends the Small Business Act 
by allowing small businesses owned by veterans and service-disabled 
veterans to extend their SBA program participation time limitations by 
the length of time that their owners are called up in defense of our 
Nation. Currently, small business owners who are called up to active 
duty in the Guard or Reserve are effectively penalized for serving 
because their active duty time is counted against the time limitations 
on participation of the Small Business Administration's programs.
  Finally, my bill requires that the Department of Defense take 
measures to counsel Guard and Reserve members concerning the importance 
of notifying their employers in a timely manner after they receive 
Orders that they will be called up to active duty. The legislation 
further requires that the DoD investigate ways to diminish the lag 
between the time when military personnel are notified of their call-up 
and the time that military personnel notify their employers.
  Enacting this legislation is an important first step in the right 
direction toward assisting the brave men and women who serve in our 
Guard and Reserve and the businesses that employ them. However, I 
realize that this legislation is merely one of many steps that can and 
should be taken to this end and welcome new ideas to help this 
constituency.
  I encourage my colleagues to join me in supporting this bill, and to 
continue to work with me, as well as veterans, policymakers, 
businesses, and others, to find additional solutions to address these 
vital issues.
  I ask unanimous consent that the text of the bill and that a section-
by-section summary of the bill be printed in the Record.
  Thank you for allowing me the opportunity to discuss this pressing 
matter.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1014

       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 ``Supporting Our Patriotic 
     Businesses Act of 2005''.

     SEC. 2. FINDINGS.

       Congress finds the following:
       (1) From September 2001 through November 2004, 
     approximately 410,000 members of the reserve components of 
     the Armed Forces, including the National Guard and Reserves, 
     have been mobilized in support of United States military 
     operations.
       (2) According to 2004 data from the Manpower Data Center of 
     the Department of Defense, an estimated 35 percent of Guard 
     members and Reservists are either self-employed or own or are 
     employed by a small business.
       (3) The majority of privately employed National Guard and 
     Reserve members either work for a small business or are self-
     employed.
       (4) As a result of activations, many small businesses have 
     been forced to go without their owners and key personnel for 
     months, and sometimes years, on end.
       (5) The effects have been devastating to such patriotic 
     small businesses.
       (6) The Office of Veterans Business Development of the 
     Small Business Administration has made a concerted effort to 
     reach out to small businesses affected by deployments, but 
     given the sheer numbers of those deployed, their resources 
     have been stretched thin.
       (7) In addition, the Office of Veterans Business 
     Development has been required to broaden its delivery of 
     services, as directed by Executive Order 13360, to provide 
     procurement training programs for service-disabled veterans.
       (8) This Act will help to stem the effects of National 
     Guard and Reservist deployments on small businesses, and 
     better assist veterans and service-disabled veterans with 
     their business needs.

     SEC. 3. INCREASED FUNDING FOR THE OFFICE OF VETERANS BUSINESS 
                   DEVELOPMENT.

       There is authorized to be appropriated to the Office of 
     Veterans Business Development of the Small Business 
     Administration, and to remain available until expended--
       (1) $2,000,000 for fiscal year 2006;
       (2) $2,100,000 for fiscal year 2007; and
       (3) $2,200,000 for fiscal year 2008.

     SEC. 4. PERMANENT EXTENSION OF SBA ADVISORY COMMITTEE ON 
                   VETERANS BUSINESS AFFAIRS.

       (a) Assumption of Duties.--Section 33 of the Small Business 
     Act (15 U.S.C. 657c) is amended--
       (1) by striking subsection (h); and
       (2) by redesignating subsections (i) through (k) as 
     subsections (h) through (j), respectively.
       (b) Permanent Extension of Authority.--Section 203 of the 
     Veterans Entrepreneurship and Small Business Development Act 
     of 1999 (15 U.S.C. 657b note) is amended by striking 
     subsection (h).

     SEC. 5. PROFESSIONAL AND OCCUPATIONAL LICENSING.

       (a) In General.--Title VII of the Servicemembers Civil 
     Relief Act (50 U.S.C. App. 591 et seq.) is amended by adding 
     at the end the following new section:
       ``SEC. 707. CONTINUING EDUCATION REQUIREMENTS FOR 
           PROFESSIONAL AND OCCUPATIONAL LICENSES.
       ``(a) Applicability.--This section applies to any 
     servicemember who, after the date of enactment of this 
     section, is ordered to active duty (other than for training) 
     pursuant to section 688, 12301(a), 12301(g), 12302, 12304, 
     12306, or 12307 of title 10, United States Code, or who is 
     ordered to active duty under section 12301(d) of such title, 
     during a period when members are on active duty pursuant to 
     any such section.
       ``(b) Continuing Education Requirements.--A servicemember 
     described in subsection (a) may not be required to complete 
     the satisfaction of any continuing education requirements 
     imposed with respect to the profession or occupation of the 
     servicemember that accrue during the period of active duty of 
     the servicemember as described in that subsection--
       ``(1) during such period of active duty; and
       ``(2) during the 120-day period beginning on the date of 
     the release of the servicemember from such period of active 
     duty.
       ``(c) Active Duty Defined.--In this section, the term 
     `active duty' has the meaning given that term in section 
     101(d) of title 10, United States Code.''.
       (b) Clerical Amendment.--The table of contents for such Act 
     is amended by adding at the end the following new item:

``Sec. 707. Continuing education requirements for professional and 
              occupational licenses.''.

     SEC. 6. RELIEF FROM TIME LIMITATIONS FOR VETERAN-OWNED SMALL 
                   BUSINESSES.

       Section 3(q) of the Small Business Act (15 U.S.C. 632(q)) 
     is amended by adding at the end the following:
       ``(5) Relief from time limitations.--
       ``(A) In general.--Any time limitation on any 
     qualification, certification, or period of participation 
     imposed under this Act on any program available to small 
     business concerns shall be extended for a small business 
     concern that--
       ``(i) is owned and controlled by--

       ``(I) a veteran who was called or ordered to active duty 
     under a provision of law specified in section 101(a)(13)(B) 
     of title 10, United States, on or after September 11, 2001; 
     or
       ``(II) a service-disabled veteran who became such a veteran 
     due to an injury or illness incurred or aggravated in the 
     active miliary, naval, or air service during a period of 
     active duty pursuant to a call or order to active duty under 
     a provision of law referred to in subclause (I) on or after 
     September 11, 2001; and

       ``(ii) was subject to the time limitation during such 
     period of active duty.
       ``(B) Duration.--Upon submission of proper documentation to 
     the Administrator, the extension of a time limitation under 
     subparagraph (A) shall be equal to the period of time that 
     such veteran who owned or controlled such a concern was on 
     active duty as described in that subparagraph.''.

     SEC. 7. COUNSELING OF MEMBERS OF THE NATIONAL GUARD AND 
                   RESERVES ON NOTIFICATION OF EMPLOYERS REGARDING 
                   MOBILIZATION.

       (a) Counseling Required.--The Secretary of each military 
     department shall provide each member of a reserve component 
     of the Armed Forces under the jurisdiction of the Secretary 
     who is on active duty for a period of more than 30 days, or 
     on the reserve active-status list, counseling on the 
     importance of notifying such member's employer

[[Page 9542]]

     on a timely basis of any call or order of such member to 
     active duty other than for training.
       (b) Frequency of Counseling.--Each member of the Armed 
     Forces described in subsection (a) shall be provided the 
     counseling required by that subsection not less often than 
     once each year.

     SEC. 8. STUDY ON OPTIONS FOR IMPROVING TIMELY NOTICE OF 
                   EMPLOYERS OF MEMBERS OF THE NATIONAL GUARD AND 
                   RESERVES REGARDING MOBILIZATION.

       (a) Study Required.--
       (1) In general.--The Secretary of Defense shall conduct a 
     study of the feasibility and advisability of various options 
     for improving the time in which employers of members of the 
     reserve components of the Armed Forces are notified of the 
     call or order of such members to active duty other than for 
     training.
       (2) Purpose.--The purpose of the study under paragraph (1) 
     shall be to identify mechanisms, if any, for eliminating or 
     reducing the time between--
       (A) the date of the call or order of members of the reserve 
     components of the Armed Forces to active duty; and
       (B) the date on which employers of such members are 
     notified of the call or order of such members to active duty.
       (b) Report.--Not later than 180 days after the date of the 
     enactment of this Act, the Secretary shall submit to the 
     appropriate committees of Congress a report on the study 
     conducted under subsection (a). The report shall include--
       (1) a description of the study, including the options 
     addressed under the study; and
       (2) such recommendations for legislative or administrative 
     action as the Secretary considers appropriate in light of the 
     results of the study.
       (c) Appropriate Committees of Congress Defined.--In this 
     section, the term ``appropriate committees of Congress'' 
     means--
       (1) the Committees on Armed Services and Small Business and 
     Entrepreneurship of the Senate; and
       (2) the Committees on Armed Services and Small Business of 
     the House of Representatives.
       Background: From September 2001 through November 2004, 
     approximately 410,000 National Guard and Reserve personnel 
     have been mobilized in support of current operations. Thirty-
     five percent of Guard and Reserve members work for small 
     businesses or are self-employed, 26 percent work for large 
     businesses, 36 percent work for the government, Federal, 
     State, or local, and the remainder work for non-profits. 
     Therefore, the majority of non-government employed Guard and 
     Reserve members are either self-employed, or work for small 
     businesses. As a result of call-ups, many small businesses 
     have been forced to go without their owners and key personnel 
     for months, and sometimes years, on end. The effects have 
     been devastating to these patriotic small businesses.
       This Act will help stem the effects of Guard and Reservist 
     call-ups on small businesses and better assist veterans and 
     service-disabled veterans with their business needs.
       Section 1.--Title, ``The Supporting Our Patriotic 
     Businesses Act.''
       Section 2.--Findings
       Section 3.--Authorizes increased appropriations for the 
     Small Business Administration's (SBA) Office of Veteran 
     Business Development to $2 million for Fiscal Year 2006, $2.1 
     million for Fiscal Year 2007 and $2.2 million for Fiscal Year 
     2008.
       Reasoning: The SBA's Office of Veteran Business Development 
     has made a concerted effort to reach out to small businesses 
     affected by military deployments, but given the sheer number 
     of those deployed, their resources have been stretched thin. 
     In addition, the Office of Veterans Business Development is 
     now required to broaden its delivery of services, as directed 
     by Executive Order 13360, to provide procurement training 
     programs for service-disabled veterans. This provision will 
     allow the SBA's Office of Veterans Business Development to 
     better assist our nation's veterans and provide them the 
     business services they need.
       Section 4.--Permanently extends the authority and duties of 
     the SBA's Advisory Committee on Veterans Business Affairs.
       Reasoning: The SBA's Advisory Committee on Veterans 
     Business Affairs has served as a valuable independent source 
     of advice and policy on veterans business issues to: the SBA 
     Administrator; the SBA's Associate Administrator for Veterans 
     Business Development; the Congress; the President; and other 
     U.S. policymakers. The Advisory Committee was commissioned 
     under P.L. 106-50 and is set to terminate its duties on 
     September 20, 2006. This provision will help ensure that the 
     Advisory Committee's vital duties, and the information it 
     provides, are continued.
       Section 5.--Provides that a service member need not satisfy 
     any continuing education requirements, imposed with respect 
     to their profession or occupation, while they are called up, 
     or within the 120-day period after they are released from the 
     call-up.
       Reasoning: Many Guard and Reserve personnel have continuing 
     education requirements that they are unable to satisfy 
     because of being called to active duty. These patriotic 
     individuals should not have to satisfy these continuing 
     education requirements. NOTE: This provision is a floor, not 
     a ceiling. It should not discourage State or other entities 
     from offering extended benefits/breaks to deployed Guard and 
     Reserve members.
       Section 6.--Amends the Small Business Act by allowing small 
     businesses owned by veterans and service-disabled veterans to 
     extend their SBA program participation time limitations by 
     the duration of their owners' active duty service after 
     September 11, 2001.
       Reasoning: Some of the SBA's contracting and business 
     development programs have defined time limits for 
     participation. If the firm's time for participation expires 
     prematurely, then competitive opportunities, investments, and 
     jobs become lost. Currently, small business owners who get 
     called up to active duty in the National Guard or Reserve are 
     effectively penalized because their active duty time is 
     counted against the time limitations on participation in the 
     SBA's programs.
       Section 7.--Requires that the Secretary of each military 
     department ensure that counseling is provided, at least once 
     a year, to members of the National Guard and Reserves on the 
     importance of notifying their employers regarding their 
     mobilization.
       Reasoning: Employers often receive little warning of a 
     guard or reservist's call-up. A survey published by the DoD 
     in November 2003 (DMDC Report No. 2003-10), which questioned 
     guard and reservists who had been called up over the previous 
     24 months, indicated that they notified their civilian 
     employers an average of 13 days before their call-up began. 
     The survey also showed that almost 60 percent of Guard and 
     Reservists gave their employers advance notice of one week or 
     less. Unfortunately, providing short notice to employers does 
     not allow them time to adequately plan for a guard member or 
     Reservist's absence, and ultimately hurts a business's bottom 
     line. It is important that employers have ample time to make 
     the adjustments necessary to sustain their business.
       Section 8.--Improves the focus upon notifying employers in 
     a timely manner regarding call-ups.
       Reasoning: For the reasons provided under Section 7, this 
     provision would commission a DoD study on ways to improve the 
     timely notice of employers regarding call-ups.
                                 ______
                                 
      By Mr. DeMINT:
  S. 1015. A bill to amend the Public Health Service Act to provide for 
cooperative governing of individual health insurance coverage offered 
in interstate commerce; to the Committee on Health, Education, Labor, 
and Pensions.
  Mr. DeMINT. Mr. President, I rise today to introduce The Health Care 
Choice Act of 2005, a bill that would help Americans afford health 
insurance.
  Approximately 45 million Americans lack health insurance. These 
uninsured Americans face significant hurdles in entering the insurance 
marketplace, including limited choices of insurers and inflexible 
benefit options. For most, the high cost of health insurance is the 
biggest impediment to getting coverage. In fact, nearly two-thirds of 
the uninsured are the working poor, and they cite the high cost of 
insurance as the primary barrier to accessing health coverage.
  The cost of insurance is often increased by excessive State 
regulations. These State mandates raise the cost of insurance which, in 
turn, increases the number of Americans who are priced out of the 
health insurance market.
  The Health Care Choice Act will allow consumers to shop for health 
insurance the same way they do for other insurance products--online, by 
mail, over the phone, or in consultation with an insurance agent in 
their hometown. The Act empowers consumers by giving them the ability 
to purchase an affordable health insurance policy with a range of 
options.
  Consumers will no longer be limited to picking only those policies 
that meet their state's regulations and mandated benefits. Instead, 
they can examine the wide array of insurance policies qualified in one 
State and offered for sale in multiple states. Consumers can choose the 
policy that best suits their needs, and their budget, without regard to 
State boundaries. Individuals looking for basic health insurance 
coverage can opt for a policy with few benefit mandates, and such a 
policy will be more affordable. On the other hand, consumers who have 
an interest in a particular benefit, such as infertility treatments, 
will be able to purchase a policy which includes that benefit.
  The Health Care Choice Act will help the uninsured find affordable 
health insurance, while also providing every

[[Page 9543]]

American with more and better health insurance choices. The bill 
harnesses the power of the marketplace to allow Americans to tailor 
their insurance choices to their individual needs.
  I am grateful to Congressman Shadegg for introducing the Health Care 
Choice Act in the House today, and I urge my Senate colleagues to 
support this bill.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1015

       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 ``Health Care Choice Act of 
     2005''.

     SEC. 2. SPECIFICATION OF CONSTITUTIONAL AUTHORITY FOR 
                   ENACTMENT OF LAW.

       This Act is enacted pursuant to the power granted Congress 
     under article I, section 8, clause 3, of the United States 
     Constitution.

     SEC. 3. FINDINGS.

       Congress finds the following:
       (1) The application of numerous and significant variations 
     in State law impacts the ability of insurers to offer, and 
     individuals to obtain, affordable individual health insurance 
     coverage, thereby impeding commerce in individual health 
     insurance coverage.
       (2) Individual health insurance coverage is increasingly 
     offered through the Internet, other electronic means, and by 
     mail, all of which are inherently part of interstate 
     commerce.
       (3) In response to these issues, it is appropriate to 
     encourage increased efficiency in the offering of individual 
     health insurance coverage through a collaborative approach by 
     the States in regulating this coverage.
       (4) The establishment of risk-retention groups has provided 
     a successful model for the sale of insurance across State 
     lines, as the acts establishing those groups allow insurance 
     to be sold in multiple States but regulated by a single 
     State.

     SEC. 4. COOPERATIVE GOVERNING OF INDIVIDUAL HEALTH INSURANCE 
                   COVERAGE.

       (a) In General.--Title XXVII of the Public Health Service 
     Act (42 U.S.C. 300gg et seq.) is amended by adding at the end 
     the following new part:

``PART D--COOPERATIVE GOVERNING OF INDIVIDUAL HEALTH INSURANCE COVERAGE

     ``SEC. 2795. DEFINITIONS.

       ``In this part:
       ``(1) Primary state.--The term `primary State' means, with 
     respect to individual health insurance coverage offered by a 
     health insurance issuer, the State designated by the issuer 
     as the State whose covered laws shall govern the health 
     insurance issuer in the sale of such coverage under this 
     part. An issuer, with respect to a particular policy, may 
     only designate one such State as its primary State with 
     respect to all such coverage it offers. Such an issuer may 
     not change the designated primary State with respect to 
     individual health insurance coverage once the policy is 
     issued, except that such a change may be made upon renewal of 
     the policy. With respect to such designated State, the issuer 
     is deemed to be doing business in that State.
       ``(2) Secondary state.--The term `secondary State' means, 
     with respect to individual health insurance coverage offered 
     by a health insurance issuer, any State that is not the 
     primary State. In the case of a health insurance issuer that 
     is selling a policy in, or to a resident of, a secondary 
     State, the issuer is deemed to be doing business in that 
     secondary State.
       ``(3) Health insurance issuer.--The term `health insurance 
     issuer' has the meaning given such term in section 
     2791(b)(2), except that such an issuer must be licensed in 
     the primary State and be qualified to sell individual health 
     insurance coverage in that State.
       ``(4) Individual health insurance coverage.--The term 
     `individual health insurance coverage' means health insurance 
     coverage offered in the individual market, as defined in 
     section 2791(e)(1).
       ``(5) Applicable state authority.--The term `applicable 
     State authority' means, with respect to a health insurance 
     issuer in a State, the State insurance commissioner or 
     official or officials designated by the State to enforce the 
     requirements of this title for the State with respect to the 
     issuer.
       ``(6) Hazardous financial condition.--The term `hazardous 
     financial condition' means that, based on its present or 
     reasonably anticipated financial condition, a health 
     insurance issuer is unlikely to be able--
       ``(A) to meet obligations to policyholders with respect to 
     known claims and reasonably anticipated claims; or
       ``(B) to pay other obligations in the normal course of 
     business.
       ``(7) Covered laws.--The term `covered laws' means the 
     laws, rules, regulations, agreements, and orders governing 
     the insurance business pertaining to--
       ``(A) individual health insurance coverage issued by a 
     health insurance issuer;
       ``(B) the offer, sale, and issuance of individual health 
     insurance coverage to an individual; and
       ``(C) the provision to an individual in relation to 
     individual health insurance coverage of--
       ``(i) health care and insurance related services;
       ``(ii) management, operations, and investment activities of 
     a health insurance issuer; and
       ``(iii) loss control and claims administration for a health 
     insurance issuer with respect to liability for which the 
     issuer provides insurance.
       ``(8) State.--The term `State' means only the 50 States and 
     the District of Columbia.
       ``(9) Unfair claims settlement practices.--The term `unfair 
     claims settlement practices' means only the following 
     practices:
       ``(A) Knowingly misrepresenting to claimants and insured 
     individuals relevant facts or policy provisions relating to 
     coverage at issue.
       ``(B) Failing to acknowledge with reasonable promptness 
     pertinent communications with respect to claims arising under 
     policies.
       ``(C) Failing to adopt and implement reasonable standards 
     for the prompt investigation and settlement of claims arising 
     under policies.
       ``(D) Failing to effectuate prompt, fair, and equitable 
     settlement of claims submitted in which liability has become 
     reasonably clear.
       ``(E) Refusing to pay claims without conducting a 
     reasonable investigation.
       ``(F) Failing to affirm or deny coverage of claims within a 
     reasonable period of time after having completed an 
     investigation related to those claims.
       ``(10) Fraud and abuse.--The term `fraud and abuse' means 
     an act or omission committed by a person who, knowingly and 
     with intent to defraud, commits, or conceals any material 
     information concerning, one or more of the following:
       ``(A) Presenting, causing to be presented or preparing with 
     knowledge or belief that it will be presented to or by an 
     insurer, a reinsurer, broker or its agent, false information 
     as part of, in support of or concerning a fact material to 
     one or more of the following:
       ``(i) An application for the issuance or renewal of an 
     insurance policy or reinsurance contract.
       ``(ii) The rating of an insurance policy or reinsurance 
     contract.
       ``(iii) A claim for payment or benefit pursuant to an 
     insurance policy or reinsurance contract.
       ``(iv) Premiums paid on an insurance policy or reinsurance 
     contract.
       ``(v) Payments made in accordance with the terms of an 
     insurance policy or reinsurance contract.
       ``(vi) A document filed with the commissioner or the chief 
     insurance regulatory official of another jurisdiction.
       ``(vii) The financial condition of an insurer or reinsurer.
       ``(viii) The formation, acquisition, merger, 
     reconsolidation, dissolution or withdrawal from one or more 
     lines of insurance or reinsurance in all or part of a State 
     by an insurer or reinsurer.
       ``(ix) The issuance of written evidence of insurance.
       ``(x) The reinstatement of an insurance policy.
       ``(B) Solicitation or acceptance of new or renewal 
     insurance risks on behalf of an insurer reinsurer or other 
     person engaged in the business of insurance by a person who 
     knows or should know that the insurer or other person 
     responsible for the risk is insolvent at the time of the 
     transaction.
       ``(C) Transaction of the business of insurance in violation 
     of laws requiring a license, certificate of authority or 
     other legal authority for the transaction of the business of 
     insurance.
       ``(D) Attempt to commit, aiding or abetting in the 
     commission of, or conspiracy to commit the acts or omissions 
     specified in this paragraph.

     ``SEC. 2796. APPLICATION OF LAW.

       ``(a) In General.--The covered laws of the primary State 
     shall apply to individual health insurance coverage offered 
     by a health insurance issuer in the primary State and in any 
     secondary State, but only if the coverage and issuer comply 
     with the conditions of this section with respect to the 
     offering of coverage in any secondary State.
       ``(b) Exemptions From Covered Laws in a Secondary State.--
     Except as provided in this section, a health insurance issuer 
     with respect to its offer, sale, renewal, and issuance of 
     individual health insurance coverage in any secondary State 
     is exempt from any covered laws of the secondary State (and 
     any rules, regulations, agreements, or orders sought or 
     issued by such State under or related to such covered laws) 
     to the extent that such laws would--
       ``(1) make unlawful, or regulate, directly or indirectly, 
     the operation of the health insurance issuer operating in the 
     secondary State, except that any secondary State may require 
     such an issuer--
       ``(A) to pay, on a nondiscriminatory basis, applicable 
     premium and other taxes (including high risk pool 
     assessments) which are levied on insurers and surplus lines 
     insurers,

[[Page 9544]]

     brokers, or policyholders under the laws of the State;
       ``(B) to register with and designate the State insurance 
     commissioner as its agent solely for the purpose of receiving 
     service of legal documents or process;
       ``(C) to submit to an examination of its financial 
     condition by the State insurance commissioner in any State in 
     which the issuer is doing business to determine the issuer's 
     financial condition, if--
       ``(i) the State insurance commissioner of the primary State 
     has not done an examination within the period recommended by 
     the National Association of Insurance Commissioners; and
       ``(ii) any such examination is conducted in accordance with 
     the examiners' handbook of the National Association of 
     Insurance Commissioners and is coordinated to avoid 
     unjustified duplication and unjustified repetition;
       ``(D) to comply with a lawful order issued--
       ``(i) in a delinquency proceeding commenced by the State 
     insurance commissioner if there has been a finding of 
     financial impairment under subparagraph (C); or
       ``(ii) in a voluntary dissolution proceeding;
       ``(E) to comply with an injunction issued by a court of 
     competent jurisdiction, upon a petition by the State 
     insurance commissioner alleging that the issuer is in 
     hazardous financial condition;
       ``(F) to participate, on a nondiscriminatory basis, in any 
     insurance insolvency guaranty association or similar 
     association to which a health insurance issuer in the State 
     is required to belong;
       ``(G) to comply with any State law regarding fraud and 
     abuse (as defined in section 2795(10)), except that if the 
     State seeks an injunction regarding the conduct described in 
     this subparagraph, such injunction must be obtained from a 
     court of competent jurisdiction; or
       ``(H) to comply with any State law regarding unfair claims 
     settlement practices (as defined in section 2795(9));
       ``(2) require any individual health insurance coverage 
     issued by the issuer to be countersigned by an insurance 
     agent or broker residing in that Secondary State; or
       ``(3) otherwise discriminate against the issuer issuing 
     insurance in both the primary State and in any secondary 
     State.
       ``(c) Clear and Conspicuous Disclosure.--A health insurance 
     issuer shall provide the following notice, in 12-point bold 
     type, in any insurance coverage offered in a secondary State 
     under this part by such a health insurance issuer and at 
     renewal of the policy, with the 5 blank spaces therein being 
     appropriately filled with the name of the health insurance 
     issuer, the name of primary State, the name of the secondary 
     State, the name of the secondary State, and the name of the 
     secondary State, respectively, for the coverage concerned:
     `This policy is issued by _____ and is governed by the laws 
     and regulations of the State of _____, and it has met all the 
     laws of that State as determined by that State's Department 
     of Insurance. This policy may be less expensive than others 
     because it is not subject to all of the insurance laws and 
     regulations of the State of _____, including coverage of some 
     services or benefits mandated by the law of the State of 
     _____. Additionally, this policy is not subject to all of the 
     consumer protection laws or restrictions on rate changes of 
     the State of _____. As with all insurance products, before 
     purchasing this policy, you should carefully review the 
     policy and determine what health care services the policy 
     covers and what benefits it provides, including any 
     exclusions, limitations, or conditions for such services or 
     benefits.'.
       ``(d) Prohibition on Certain Reclassifications and Premium 
     Increases.--
       ``(1) In general.--For purposes of this section, a health 
     insurance issuer that provides individual health insurance 
     coverage to an individual under this part in a primary or 
     secondary State may not upon renewal--
       ``(A) move or reclassify the individual insured under the 
     health insurance coverage from the class such individual is 
     in at the time of issue of the contract based on the health-
     status related factors of the individual; or
       ``(B) increase the premiums assessed the individual for 
     such coverage based on a health status-related factor or 
     change of a health status-related factor or the past or 
     prospective claim experience of the insured individual.
       ``(2) Construction.--Nothing in paragraph (1) shall be 
     construed to prohibit a health insurance issuer--
       ``(A) from terminating or discontinuing coverage or a class 
     of coverage in accordance with subsections (b) and (c) of 
     section 2742;
       ``(B) from raising premium rates for all policy holders 
     within a class based on claims experience;
       ``(C) from changing premiums or offering discounted 
     premiums to individuals who engage in wellness activities at 
     intervals prescribed by the issuer, if such premium changes 
     or incentives--
       ``(i) are disclosed to the consumer in the insurance 
     contract;
       ``(ii) are based on specific wellness activities that are 
     not applicable to all individuals; and
       ``(iii) are not obtainable by all individuals to whom 
     coverage is offered;
       ``(D) from reinstating lapsed coverage; or
       ``(E) from retroactively adjusting the rates charged an 
     individual insured individual if the initial rates were set 
     based on material misrepresentation by the individual at the 
     time of issue.
       ``(e) Prior Offering of Policy in Primary State.--A health 
     insurance issuer may not offer for sale individual health 
     insurance coverage in a secondary State unless that coverage 
     is currently offered for sale in the primary State.
       ``(f) Licensing of Agents or Brokers for Health Insurance 
     Issuers.--Any State may require that a person acting, or 
     offering to act, as an agent or broker for a health insurance 
     issuer with respect to the offering of individual health 
     insurance coverage obtain a license from that State, except 
     that a State many not impose any qualification or requirement 
     which discriminates against a nonresident agent or broker.
       ``(g) Documents for Submission to State Insurance 
     Commissioner.--Each health insurance issuer issuing 
     individual health insurance coverage in both primary and 
     secondary States shall submit--
       ``(1) to the insurance commissioner of each State in which 
     it intends to offer such coverage, before it may offer 
     individual health insurance coverage in such State--
       ``(A) a copy of the plan of operation or feasibility study 
     or any similar statement of the policy being offered and its 
     coverage (which shall include the name of its primary State 
     and its principal place of business);
       ``(B) written notice of any change in its designation of 
     its primary State; and
       ``(C) written notice from the issuer of the issuer's 
     compliance with all the laws of the primary State; and
       ``(2) to the insurance commissioner of each secondary State 
     in which it offers individual health insurance coverage, a 
     copy of the issuer's quarterly financial statement submitted 
     to the primary State, which statement shall be certified by 
     an independent public accountant and contain a statement of 
     opinion on loss and loss adjustment expense reserves made 
     by--
       ``(A) a member of the American Academy of Actuaries; or
       ``(B) a qualified loss reserve specialist.
       ``(h) Power of Courts To Enjoin Conduct.--Nothing in this 
     section shall be construed to affect the authority of any 
     Federal or State court to enjoin--
       ``(1) the solicitation or sale of individual health 
     insurance coverage by a health insurance issuer to any person 
     or group who is not eligible for such insurance; or
       ``(2) the solicitation or sale of individual health 
     insurance coverage by, or operation of, a health insurance 
     issuer that is in hazardous financial condition.
       ``(i) State Powers To Enforce State Laws.--
       ``(1) In general.--Subject to the provisions of subsection 
     (b)(1)(G) (relating to injunctions) and paragraph (2), 
     nothing in this section shall be construed to affect the 
     authority of any State to make use of any of its powers to 
     enforce the laws of such State with respect to which a health 
     insurance issuer is not exempt under subsection (b).
       ``(2) Courts of competent jurisdiction.--If a State seeks 
     an injunction regarding the conduct described in paragraphs 
     (1) and (2) of subsection (h), such injunction must be 
     obtained from a Federal or State court of competent 
     jurisdiction.
       ``(j) States' Authority To Sue.--Nothing in this section 
     shall affect the authority of any State to bring action in 
     any Federal or State court.
       ``(k) Generally Applicable Laws.--Nothing in this section 
     shall be construed to affect the applicability of State laws 
     generally applicable to persons or corporations.

     ``SEC. 2797. PRIMARY STATE MUST MEET FEDERAL FLOOR BEFORE 
                   ISSUER MAY SELL INTO SECONDARY STATES.

       ``A health insurance issuer may not offer, sell, or issue 
     individual health insurance coverage in a secondary State if 
     the primary State does not meet the following requirements:
       ``(1) The State insurance commissioner must use a risk-
     based capital formula for the determination of capital and 
     surplus requirements for all health insurance issuers.
       ``(2) The State must have legislation or regulations in 
     place establishing an independent review process for 
     individuals who are covered by individual health insurance 
     coverage unless the issuer provides an independent review 
     mechanism functionally equivalent (as determined by the 
     primary State insurance commissioner or official) to that 
     prescribed in the `Health Carrier External Review Model Act' 
     of the National Association of Insurance Commissioners for 
     all individuals who purchase insurance coverage under the 
     terms of this part.

     ``SEC. 2798. ENFORCEMENT.

       ``(a) In General.--Subject to subsection (b), with respect 
     to specific individual health insurance coverage the primary 
     State for such coverage has sole jurisdiction to enforce the 
     primary State's covered laws in the primary State and any 
     secondary State.
       ``(b) Secondary State's Authority.--Nothing in subsection 
     (a) shall be construed to affect the authority of a secondary 
     State to enforce its laws as set forth in the exception 
     specified in section 2796(b)(1).

[[Page 9545]]

       ``(c) Court Interpretation.--In reviewing action initiated 
     by the applicable secondary State authority, the court of 
     competent jurisdiction shall apply the covered laws of the 
     primary State.
       ``(d) Notice of Compliance Failure.--In the case of 
     individual health insurance coverage offered in a secondary 
     State that fails to comply with the covered laws of the 
     primary State, the applicable State authority of the 
     secondary State may notify the applicable State authority of 
     the primary State.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to individual health insurance coverage offered, 
     issued, or sold after the date of the enactment of this Act.

     SEC. 5. SEVERABILITY.

       If any provision of the Act or the application of such 
     provision to any person or circumstance is held to be 
     unconstitutional, the remainder of this Act and the 
     application of the provisions of such to any other person or 
     circumstance shall not be affected.
                                 ______
                                 
      By Mr. CHAFEE (for himself, Mr. Inhofe, Mr. Jeffords, Mrs. 
        Clinton, Mr. Lautenberg, Mr. Vitter, Mr. Baucus, Ms. Murkowski, 
        Mr. Crapo, Mr. Enzi, and Mr. Corzine):
  S. 1017. A bill to reauthorize grants from the water resources 
research and technology institutes established under the Water 
Resources Research Act of 1984; to the Committee on Environment and 
Public Works.
  Mr. CHAFEE. Mr. President, I rise today to introduce legislation 
reauthorizing appropriations for the Water Resources Research Act. The 
Chairman and Ranking Member of the Senate Committee on Environment and 
Public Works, Senators Inhofe and Jeffords, respectively, as well as 
Senators Clinton, Lautenberg, Baucus, Murkowski, Crapo, Enzi and 
Corzine have joined me as original cosponsors of this important 
legislation to address our nation's water resource concerns.
  Originally enacted in 1964, the Water Resources Research Act 
authorizes the establishment of a nationwide, State-based network of 
Water Resources Research Institutes. These Institutes represent a 
partnership among State universities; Federal, State, and local 
governments; and stakeholders aimed at solving problems of water supply 
and water quality. They are located at the land-grant universities in 
each of the 50 States, the territories and the District of Columbia.
  The 54 Water Resources Research Institutes are charged with 
conducting competent research to develop new technologies and more 
efficient methods for resolving local, State and national water-
resources problems; fostering new research scientists into water 
resources fields; and facilitating water research coordination and the 
application of research results through information dissemination and 
technology transfer.
  The Institutes provide important support to the States in their long-
term water planning, policy development, and management. A significant 
portion of the Institutes' work is intended to help State and local 
water managers implement Federal regulations in ways that are tailored 
to local and State institutions and natural conditions. Water quality 
regulations, drinking water standards, wastewater treatment, and water 
reuse programs are examples of areas in which the Institutes provide 
research and information transfer.
  In my own State, the Rhode Island Water Resources Center is located 
at the University of Rhode Island. The Center's recent activities have 
included working with the Rhode Island Airport Corporation to develop a 
plan for mitigating runoff contamination due to deicing and anti-icing 
operations at T.F.Green Airport. Other work conducted by the Center has 
encompassed evaluating the scour potential of streams and river banks 
in the State to study how they may be affected by land use and other 
changes; developing a statewide public water-supply GIS coverage 
program; and working with communities to evaluate MTBE drinking water 
contamination.
  In addition to research, the outreach and information transfer 
activities of the Institutes are highly valued by multi-level 
stakeholders at the local, State and regional levels. The Institutes 
are the training grounds for the next generation of the Nation's water 
scientists, economists and engineers. This nationwide network of water 
institutes provides an efficient and effective method to meet the 
diverse water resource needs in different parts of our country.
  Another key component of the program is the importance of its small 
Federal grants for leveraging funding from non-federal sources to 
identify and address local and State needs for water research. Without 
this Federal seed money, many institutes would lose a valuable resource 
and the visibility within their universities and among Federal, State 
and local water agencies for working on challenging water resource 
problems. The Federal grants allow immense leverage capacity for 
conducting water research activities and are the key to maintaining a 
valuable national network.
  The legislation I am introducing today reauthorizes $62 million in 
funding through fiscal year 2010 for the Nation's Water Resources 
Research Institutes and $32 million for the Act's Interstate Research 
Program. I look forward to working with the bill's original cosponsors 
as well as my colleagues on the Environment and Public Works Committee 
to ensure this national network of university-based research institutes 
continues to support the water resources needs of the Nation.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1017

       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 ``Water Resources Research Act 
     Amendments of 2005''.

     SEC. 2. WATER RESOURCES RESEARCH.

       (a) Authorization of Appropriations.--Section 104(f) of the 
     Water Resources Research Act of 1984 (42 U.S.C. 10303(f)) is 
     amended--
       (1) in the subsection header, by striking ``IN GENERAL'';
       (2) by striking paragraph (1) and inserting the following:
       ``(1) In general.--There is authorized to be appropriated 
     to carry out this section, to remain available until 
     expended--
       ``(A) $12,000,000 for each of fiscal years 2006 through 
     2008; and
       ``(B) $13,000,000 for each of fiscal years 2009 and 
     2010.''; and
       (3) in paragraph (2), by striking ``(2) Any'' and inserting 
     the following:
       ``(2) Failure to obligate funds.--Any''.
       (b) Additional Appropriations Where Research Focused on 
     Water Problems of Interstate Nature.--Section 104(g) of the 
     Water Resources Research Act of 1984 (42 U.S.C. 10303(g)) is 
     amended--
       (1) by redesignating paragraph (2) as paragraph (4); and
       (2) in paragraph (1)--
       (A) in the first sentence--
       (i) by striking ``There'' and inserting the following:
       ``(1) In general.--There''; and
       (ii) by striking ``$3,000,000 for fiscal year 2001, 
     $4,000,000 for fiscal years 2002 and 2003, and $6,000,000 for 
     fiscal years 2004 and 2005'' and inserting ``$6,000,000 for 
     each of fiscal years 2006 through 2008 and $7,000,000 for 
     each of fiscal years 2009 and 2010'';
       (B) in the second sentence, by striking ``Such'' and 
     inserting the following:
       ``(2) Non-federal matching funds.--The''; and
       (C) in the third sentence, by striking ``Funds'' and 
     inserting the following:
       ``(3) Availability of funds.--Funds''.
                                 ______
                                 
      By Mr. SARBANES:
  S. 1018. A bill to provide that transit pass transportation fringe 
benefits be made available to all qualified Federal employees in the 
National Capital Region; to alllow passenger carriers which are owned 
or leased by the Government to be used to transport Government 
employees between their place of employment and mass transit 
facilities, and for other purposes; to the Committee on Homeland 
Security and Governmental Affairs.
  Mr. SARBANES. Mr. President, I am pleased to introduce the Federal 
Employee Commuter Benefits Act of 2005, which is cosponsored by my 
colleagues Senators Mikulski and Warner. This bill will guarantee 
transit benefits to all Federal employees in the National Capital Area 
and will remove a restriction that currently forbids Federal

[[Page 9546]]

agencies from providing employee shuttles to and from transit stations. 
This measure is an important step forward in our efforts to encourage 
transit ridership and improve the quality of life for federal employees 
in the Washington, D.C. region and throughout the Nation.
  All across the Nation, congestion and gridlock are taking their toll 
in terms of economic loss, environmental impact, and personal 
frustration. According to the Texas Transportation Institute, in 2003 
Americans in 85 urban areas spent 3.7 billion hours stuck in traffic, 
with an estimated cost to the nation of $64.8 billion in lost time and 
wasted fuel. In response, Americans are turning to alternative 
transportation in record numbers. The American Public Transportation 
Association estimates that Americans now take over 9 billion trips on 
transit per year, the highest level in more than 40 years. The Texas 
Transportation Institute has estimated that without transit, the 85 
urban areas they studied would have suffered an additional 1.1 billion 
hours of delay, a 27 percent increase, which would have added $18 
billion to the national cost of congestion.
  Transit benefit programs are playing a vital role in increasing 
transit ridership, which benefits both transit users and drivers. In 
1998, the Transportation Equity Act for the 21st Century amended the 
tax code to allow financial incentives related to commuting costs for 
both employers and employees. These transit benefits allowed employers 
to offer a tax-free financial incentive toward the costs of transit 
commuting, starting at $65 per month and raised in 2005 to $105 per 
month.
  Based upon the findings of the Environmental Protection Agency and 
the U.S. Department of Transportation, there are clear improvements to 
congestion, energy efficiency, and air quality from transit benefit 
programs. According to their findings, an employer with 1,000 employees 
that participates in a combination of transit benefits, carpool, and 
telecommuting programs can take credit for taking 175 cars off the 
road, saving 44,000 gallons of gasoline per year, and cutting global 
warming pollution by 420 tons per year on average.
  In April 2000, an Executive Order was signed requiring all executive 
branch agencies in the National Capital Region to offer transit 
benefits to their employees. As a result, Federal employees commuting 
to Washington, D.C. from Montgomery, Prince George's, and Frederick 
Counties, Maryland, several counties in Northern Virginia, and as far 
away as West Virginia, are encouraged to choose transit as their means 
to get to work.
  According to the Washington Metropolitan Area Transit Authority and 
the U.S. Department of Transportation, more than 150,000 employees--
more than one-third of all Federal employees in the National Capital 
Region--joined the Federal transit benefit program created by the 
Executive Order. These program participants alone have eliminated an 
estimated 12,500 single-occupancy vehicles from Washington, D.C. area 
roads, helping to reduce congestion and improve air quality for our 
region.
  The Executive Order, however, is limited. It does not cover employees 
in the legislative and judicial branches, for example, or in dozens of 
independent agencies. While many of the employers in those 
organizations provide transit benefits to their employees, the 
implementation and level of benefit is up to the discretion of 
individual offices. As such, many of these organizations provide 
limited benefits or do not provide any benefits at all. Guaranteed 
transit benefits would give these employees more choice in their 
commuting options and provide an additional incentive to move off our 
congested roadways and onto public transit.
  Of course, such incentives will be ineffective if employees lack 
access to transit services. In my own state of Maryland, the United 
States Food and Drug Administration planned to use its own resources to 
provide a shuttle service for its employees from its new White Oak 
facility to an area Metro station. When they investigated providing 
this service, FDA officials found that the current law does not allow 
federal agencies to use their own vehicles to shuttle employees to mass 
transit stations.
  The potential impact of this restriction on regional congestion is 
not insignificant. By the middle of this year, FDA expects to have 
1,850 employees located at the new White Oak facility, and plans have 
been made to eventually house more than 7,000 FDA researchers and 
administrators at the new facility. The lack of access from FDA's new 
campus to a transit station represents a lost opportunity for reducing 
congestion, improving our environment and elevating the quality of life 
for employees.
  This type of lost opportunity occurs across the nation. Nationally, 
the Federal Government employs more than 2.6 million civilian workers 
at more than 3,000 Federal Government office buildings. At Federal 
offices throughout the country, transit use is often limited as a 
commuting option due to lack of employee access to a transit station or 
a bus stop.
  The Federal Employee Commuter Benefits Act would address both of 
these issues faced by Federal employees. First, the bill would put into 
law the Executive Order's requirement that transit pass benefits be 
made available to all qualified Federal employees in the National 
Capital Region. The bill also extends the requirement beyond executive 
branch agencies to include the legislative and judicial branches and 
the independent agencies, providing guaranteed transit benefits to 
thousands of additional federal employees in the Washington, DC region.
  Second, the Federal Employee Commuter Benefits Act would remove the 
restriction that prohibits a Federal agency from operating a shuttle 
service to a public transit facility. With this legislation, any 
Federal agency, anywhere in the United States, can choose to provide a 
transit shuttle service for their employees. By providing access to 
commuting alternatives, Federal agencies will be able to provide a 
benefit to their employees that can make getting to work easier, more 
affordable, and more employee-friendly. It will also provide an 
opportunity to help reduce congestion and improve air quality across 
the Nation.
  Since 1982, the U.S. population has grown 20 percent, but the time 
spent by commuters in traffic has grown by over 200 percent. Each year, 
traffic congestion wastes nine billion gallons of fuel. By encouraging 
federal employees to look to transit and by providing access to transit 
stations, we can help reduce congestion, improve the environment, and 
promote an improved quality of life.
  I am introducing the Federal Employee Commuter Benefits Act because 
of the opportunities it will give federal agencies to support public 
transportation, both by providing employee access to transit facilities 
across the nation, and by providing transit benefits to federal 
employees in the Washington, D.C. region. Both of these improvements 
will aid our efforts to fight congestion and pollution by encouraging 
the use of transportation alternatives. This legislation is strongly 
supported by federal employees, transit providers, and local elected 
officials, and I ask unanimous consent that the text of the bill, along 
with letters of support, be printed in the Record. I encourage my 
colleagues to join me in supporting the Federal Employee Commuter 
Benefits Act.
  There being no objection, the materials were ordered to be printed in 
the Record, as follows:

                                S. 1018

       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 ``Federal Employee Commuter 
     Benefits Act of 2005''.

     SEC. 2. TRANSIT PASS TRANSPORTATION FRINGE BENEFITS.

       (a) In General.--Effective as of the first day of the next 
     fiscal year beginning after the date of the enactment of this 
     Act, each covered agency shall implement a program under 
     which all qualified Federal employees serving in or under 
     such agency shall be offered transit pass transportation 
     fringe benefits, as described in subsection (b).
       (b) Benefits Described.--The benefits described in this 
     subsection are the transit

[[Page 9547]]

     pass transportation fringe benefits which, under section 2 of 
     Executive Order 13150, are required to be offered by Federal 
     agencies in the National Capital Region on the date of 
     enactment of this Act.
       (c) Definitions.--In this section--
       (1) the term ``covered agency'' means any agency, to the 
     extent of its facilities in the National Capital Region;
       (2) the term ``agency'' means any agency (as defined by 
     7905(a)(2) of title 5, United States Code), the United States 
     Postal Service, the Postal Rate Commission, and the 
     Smithsonian Institution;
       (3) the term ``National Capital Region'' includes the 
     District of Columbia and every county or other geographic 
     area covered by section 2 of Executive Order 13150;
       (4) the term ``Executive Order 13150'' refers to Executive 
     Order 13150 (5 U.S.C. 7905 note);
       (5) the term ``Federal agency'' is used in the same way as 
     under section 2 of Executive Order 13150; and
       (6) any determination as to whether or not one is a 
     ``qualified Federal employee'' shall be made applying the 
     same criteria as would apply under section 2 of Executive 
     Order 13150.
       (d) Rule of Construction.--Nothing in this section shall be 
     considered to require that a covered agency--
       (1) terminate any program or benefits in existence on the 
     date of the enactment of this Act, or postpone any plans to 
     implement (before the effective date referred to in 
     subsection (a)) any program or benefits permitted or required 
     under any other provision of law; or
       (2) discontinue (on or after the effective date referred to 
     in subsection (a)) any program or benefits referred to in 
     paragraph (1), so long as such program or benefits satisfy 
     the requirements of subsections (a) through (c).

     SEC. 3. AUTHORITY TO USE GOVERNMENT VEHICLES TO TRANSPORT 
                   FEDERAL EMPLOYEES BETWEEN THEIR PLACE OF 
                   EMPLOYMENT AND MASS TRANSIT FACILITIES.

       (a) In General.--Section 1344 of title 31, United States 
     Code, is amended--
       (1) by redesignating subsections (g) and (h) as subsections 
     (h) and (i), respectively; and
       (2) by inserting after subsection (f) the following:
       ``(g)(1) A passenger carrier may be used to transport an 
     officer or employee of a Federal agency between the officer's 
     or employee's place of employment and a mass transit facility 
     (whether or not publicly owned) in accordance with succeeding 
     provisions of this subsection.
       ``(2) Notwithstanding section 1343, a Federal agency that 
     provides transportation services under this subsection 
     (including by passenger carrier) shall absorb the costs of 
     such services using any funds available to such agency, 
     whether by appropriation or otherwise.
       ``(3) In carrying out this subsection, a Federal agency 
     shall--
       ``(A) to the maximum extent practicable, use alternative 
     fuel vehicles to provide transportation services;
       ``(B) to the extent consistent with the purposes of this 
     subsection, provide transportation services in a manner that 
     does not result in additional gross income for Federal income 
     tax purposes; and
       ``(C) coordinate with other Federal agencies to share, and 
     otherwise avoid duplication of, transportation services 
     provided under this subsection.
       ``(4) For purposes of any determination under chapter 81 of 
     title 5, an individual shall not be considered to be in the 
     `performance of duty' by virtue of the fact that such 
     individual is receiving transportation services under this 
     subsection.
       ``(5)(A) The Administrator of General Services, after 
     consultation with the National Capital Planning Commission 
     and other appropriate agencies, shall prescribe any 
     regulations necessary to carry out this subsection.
       ``(B) Transportation services under this subsection shall 
     be subject neither to the last sentence of subsection (d)(3) 
     nor to any regulations under the last sentence of subsection 
     (e)(1).
       ``(6) In this subsection, the term `passenger carrier' 
     means a passenger motor vehicle, aircraft, boat, ship, or 
     other similar means of transportation that is owned or leased 
     by the United States Government or the government of the 
     District of Columbia.''.
       (b) Funds for Maintenance, Repair, Etc.--Subsection (a) of 
     section 1344 of title 31, United States Code, is amended by 
     adding at the end the following:
       ``(3) For purposes of paragraph (1), the transportation of 
     an individual between such individual's place of employment 
     and a mass transit facility pursuant to subsection (g) is 
     transportation for an official purpose.''.
       (c) Coordination.--The authority to provide transportation 
     services under section 1344(g) of title 31, United States 
     Code (as amended by subsection (a)) shall be in addition to 
     any authority otherwise available to the agency involved.

     
                                  ____
         The American Federation of Government Employees, Local 
           12, AFL-CIO,
                                                     May 11, 2005.
     Hon. Paul Sarbanes
     U.S. Senate, Washington, DC.
     Subject: H.R. 1283

       Dear Senator Sarbanes: The American Federation of 
     Government Employees (AFGE) Local 12 represents 3,600 
     employees at the U.S. Department of Labor in the Washington 
     D.C. metropolitan area.
       We appreciate very much all the work you have done on 
     behalf of Federal employees, in particular your work to 
     assist our local in our three year battle to have the monthly 
     transit subsidy raised to $100.
       We respectfully request that you sponsor and introduce in 
     the Senate a companion bill to H.R. 1283. The purpose of H.R. 
     1283 is ``To provide that transit pass transportation fringe 
     benefits be made available to all qualified Federal employees 
     in the National Capital Region; to allow passenger carriers 
     which are owned or leased by the Government to be used to 
     transport Government employees between their place of 
     employment and mass transit facilities, and for other 
     purposes.''
       H.R. 1283 was introduced by Congressman Jim Moran and is 
     co-sponsored by Representatives Eleanor Holmes Norton, Albert 
     Wynn, Chris Van Hollen, Steny Hoyer, Frank Wolf, and Earl 
     Blurnenauer. It has been referred to the House Government 
     Reform Committee.
       Passage into law of this legislation would not only help 
     employees at any Federal agency in this area where management 
     has decided, for whatever reason, not to offer the tax-free 
     maximum transit subsidy. It would also benefit the region 
     generally by giving more Federal employees the incentive to 
     use mass transit, thus helping to lessen traffic congestion 
     and air pollution.
       The membership of AFGE Local 12 passed a resolution on May 
     5 of this year in support of this kind of legislation. A copy 
     of the resolution is attached.
       Thank you very much for your consideration of this serious 
     matter.
           Respectfully yours,
                                            Lawrence C. Drake, Jr.
     President.
                                  ____


       Approved by the membership of AFGE Local 12 on May 5, 2005


               Resolution on transit subsidy legislation

       Whereas: Using mass transit is one of the most cost-
     effective, environmentally sound, and energy efficient ways 
     for Federal employees to commute to their workplaces;
       Executive Order 13150 ordered transit subsidies, now valued 
     at a maximum of $105 a month, to be made available to all 
     executive branch employees;
       Pursuant to Executive Order 13150, the number of executive 
     branch employees utilizing transit subsidies grew from 55,000 
     to 155,000 participants, reducing highway vehicle miles 
     commuted by over 40 million;
       The Washington DC metropolitan area's traffic congestion is 
     overall the country's third worst and is worse than any other 
     metropolitan area outside California;
       As the region's largest employer, the Federal government 
     has the capacity and the moral duty to significantly reduce 
     road overcrowding and its consequent pollution by providing 
     appropriate transit benefits to encourage more widespread 
     mass transit use;
       Legislation codifying transit benefits for Federal 
     employees in the Washington DC metropolitan area and 
     repealing restrictions on Federal agencies offering their 
     employees shuttle services between their offices and transit 
     centers, unanimously approved by the House Government Reform 
     Committee in the previous Congress, has been re-introduced as 
     H.R. 1283 by Rep. Jim Moran and six co-sponsors; and
       Codifying these benefits would remedy Executive Order 
     13150's lack of legal recourse against agencies willfully 
     ignoring its requirements;
       Therefore be it resolved that:
       American Federation of Government Employees Local 12 
     endorses legislation such as H.R. 1283 which codifies 
     Executive Order 13150 and repeals restrictions on Federal 
     agencies offering their employees shuttle services between 
     their offices and transit centers; and
       AFGE 12 likewise urges other organizational entities with 
     which it is affiliated in the American Federation of 
     Government Employees and the AFL-CIO to actively seek 
     enactment of such legislation.
                                  ____

                                    American Public Transportation


                                                  Association,

                                                     May 11, 2005.
     Hon. Paul S. Sarbanes,
     Ranking Member, Senate Committee on Banking, Housing, and 
         Urban Affairs, Washington, DC.
       Dear Senator Sarbanes: On behalf of the more than 1,500 
     member organizations of the American Public Transportation 
     Association (APTA), I write to express strong support for 
     legislation you are proposing that would expand the use of 
     transit-related commuter tax benefits in the Washington, DC 
     region. This legislation will help promote the use of public 
     transportation and thereby support regional efforts to reduce 
     traffic congestion in the National Capital area. We note that 
     a recent report by the Texas Transportation Institute (TTI) 
     cited the Washington, DC metropolitan area as the third most 
     congested in the nation.
       As we understand it, your legislation would codify language 
     currently in an executive order that requires federal 
     executive

[[Page 9548]]

     branch agencies to offer to their employees transit benefits 
     equal to employee commuting costs, currently up to $105 per 
     month. The legislation would also expand the eligibility of 
     these benefits to legislative and judicial branch employees 
     in the National Capital area.
       We believe that it is important that the federal government 
     support the use of public transportation in its efforts to 
     reduce congestion, minimize auto pollution, and make the best 
     use of existing public transportation facilities that are 
     built with a substantial federal investment. APTA has been a 
     long-time proponent of providing federal tax incentives that 
     promote public transportation at no less a level than those 
     provided for parking.
       We thank you for your leadership on this issue. If you have 
     questions, please have your staff contact Rob Healy of APTA's 
     Government Affairs Department at (202) 496-4811 or e-mail 
     [email protected]. We look forward to working with you to see 
     this important legislation enacted into law.
           Sincerely yours,
                                                William W. Millar,
     President.
                                  ____



                                                        Metro,

                                                   April 15, 2005.
     Hon. Paul S. Sarbanes,
     U.S. Senate, Washington, DC.
       Dear Senator Sarbanes: I am pleased to offer the Washington 
     Metropolitan Area Transit Authority's (WMATA) endorsement of 
     the legislation you are proposing concerning federal employee 
     commuter benefits. This legislation is very important in 
     supporting regional efforts to use every feasible technique 
     to reduce the severe traffic congestion in the National 
     Capital Region.
       The recently released Texas Transportation Institute (TTI) 
     report on congestion cites the metropolitan Washington region 
     as the third most congested in the nation, despite intense 
     transit use by commuters in this area.
       The TTI report cites a number of strategies that help to 
     reduce congestion and the cost of delay to the residents of 
     the region. For the Washington metropolitan area, the TTI 
     report indicates that transit services currently save the 
     metropolitan area more than $1 billion annually in delay 
     costs and over 52 percent of current delay time. The 
     metropolitan Washington region is fifth in the nation in 
     terms of the hours of delay saved because of the public 
     transportation network. The TTI report demonstrates the 
     positive effects of transit services on reducing traffic 
     congestion in the Washington metropolitan area. With the 
     unrelentless traffic in this region, it is critical that 
     transit ridership continues to grow to relieve road 
     congestion.
       It's essential that the federal government as the region's 
     largest employer, employing more than 374,000 people in this 
     area, give employees every incentive to take transit. The 
     tremendously successful transit benefits program, known in 
     this area as Metrochek, is currently required to be offered 
     to civilian and military employees of the Executive Branch 
     and voluntarily provided by the U.S. House and Senate and 
     several independent agencies. Since the imposition of 
     Executive Order 13150 on October 1, 2000, the number of 
     federal employees receiving transit benefits has increased 
     166 percent, from 57,000 to 151,800 and 47 percent of 
     Metrorail's peak period riders are federal employees--up from 
     35 percent in the mid 1980s.
       Your proposal will codify the federal employees transit 
     benefit and expand its eligibility to judicial, legislative 
     and independent agency employees in the National Capital 
     Region. While some of these agencies already participate in 
     the Metrochek program, this legislation ensures that 
     participation will be uniform across all three branches of 
     the federal government.
       WMATA also supports the proposal to authorize the 
     establishment of federal agency shuttles to and from mass 
     transit facilities. While many federal agencies throughout 
     the region are within walking distance of Metrorail stations, 
     and other transit facilities, some are not. This legislation 
     will make transit accessible to many federal workers for whom 
     transit is not currently a viable alternative because their 
     work site is not convenient to a Metro station.
       Many thanks for your leadership in proposing this 
     legislation. It is another example in a long list of 
     initiatives you have sponsored to promote public 
     transportation in the National Capital Region and the nation.
           Sincerely,
                                                 Richard A. White,
     General Manager and Chief Executive Officer.
                                  ____

                                                     May 12, 2005.
     Hon. Paul Sarbanes, 
     Ranking Member, Senate Committee on Banking, Housing and 
         Urban Affairs, Washington, DC.
       Dear Senator Sarbanes: I am writing to you to express the 
     support of the Virginia Railway Express for your efforts to 
     reintroduce legislation that would provide transit pass 
     transportation fringe benefits to all qualified Federal 
     employees in the National Capital region. As someone who has 
     always been an advocate for the promotion of public 
     transportation and the mobility it affords the citizenry, we 
     are fortunate to have you as the Ranking Member of the Senate 
     Committee on Banking, Housing and Urban Affairs, which 
     oversees mass transit programs.
       As you have witnessed, increased federal investment in 
     transit under TEA 21 has led to dramatic growth in public 
     transportation ridership, particularly in the National 
     Capital Region. The Virginia Railway Express is a prime 
     example of that growth, with ridership increasing by 17% each 
     year for the past four years, making us one of the fastest 
     growing commuter railroads in America. Nearly 64% of our 
     ridership is comprised of federal and/or military employees 
     working in the region.
       Currently, transit benefits are offered to a select core of 
     federal employees under Executive Order 13150. The benefit is 
     limited to the executive branch agencies with no requirement 
     for participation by the legislative and judicial branches. 
     Such legislation would codify transit benefits to all 
     eligible federal employees by broadening the scope of 
     participation to another 100,000 workers, thus providing 
     greater flexibility and mobility for the federal work force 
     in the region.
       Your legislation is significant not only because it affords 
     greater options to our federal workforce, but also because 
     the use of public transit is the only recourse to help 
     relieve the growing problem of traffic congestion in the 
     region. For instance, today VRE transports enough people to 
     remove more than one lane of traffic off of I-95 and I-66 
     during peak commuting rush hours in the morning and the 
     evening. Not only does it reduce car emissions; thus 
     improving air quality, but also ensures that the federal and 
     private workforce can get to work in a timely fashion; thus 
     saving millions of dollars for employers. The passage of this 
     legislation would only increase these benefits to our region.
       In conclusion, let me again thank you for all the support 
     that you have given to public transportation over the years 
     and for authoring this much needed legislation. I hope that 
     with your direct involvement that we will be successful in 
     seeing this measure signed into law.
           Sincerely,
                                                      Dale Zehner,
                                          Chief Executive Officer.
                                 ______
                                 
      By Mr. DURBIN:
  S. 1019. A bill to amend titles 10 and 38, United States Code, to 
increase benefits for members of the Armed Forces who, after September 
11, 2001, serve on active duty outside the United States or its 
territories or possessions as part of a contingency operation 
(including a humanitarian operation, peacekeeping operation, or similar 
operation) or a combat operation; to the Committee on Finance.
  Mr. DURBIN. Mr. President, I rise today to introduce the Welcome Home 
G.I. Bill. Similar to the GI Bill for soldiers returning from World War 
II, this Welcome Home G.I Bill establishes a program of benefits 
designed to reward returning veterans and ease their transition into 
civilian life.
  These benefits would be available to troops who deployed for six 
months or more outside the United States for combat, contingency, 
peacekeeping or humanitarian operations after September 11, 2001. The 
bill also covers troops who do not meet the six-month service 
requirement because they were discharged earlier for medical or 
hardship reasons.
  This bill provides our returning heroes with improved health care, 
education and job training assistance, and help with a down-payment on 
a home.
  Returning troops deserve better health care coverage. Currently, upon 
separating from the military, active duty service members receive six 
months of healthcare coverage as a ``transition'' benefit and 
thereafter may enroll for an additional 18 months under the Continued 
Health Care Benefit Program provided they pay required premiums. 
Reservists released from active duty can pay premiums to obtain a year 
of coverage for every three months they were mobilized.
  Under the Welcome Home G.I. Bill, a returning veteran who is unable 
to secure health care coverage from an employer would be entitled to 
exactly the same medical care they received while in the service. 
Veterans would be entitled to this benefit for up to five years.
  Our troops also deserve better medical screening before and after 
deployments. Current law establishes a system of pre-deployment and 
post-deployment medical examinations, including an assessment of mental 
health and the drawing of blood samples, to accurately record the 
medical condition of members before and after their deployment.
  The Welcome Home G.I. bill improves the quality of pre-deployment and

[[Page 9549]]

post-deployment medical screening by requiring that the pre-deployment 
exam include disease screening and the collection of clinical data such 
as vital signs, immunization history and past physical or mental health 
conditions. It also requires post-deployment medical screening to 
include a self-administered survey in which the service member may 
report information about any relevant exposures during the period of 
deployment. These provisions will help identify war-related ailments so 
the information will be available to answer any future questions about 
the ailment's connection to military service.
  Returning warriors need access to educational opportunities that can 
enhance their employment prospects in civilian life after they depart 
military service. Currently active duty troops have the option of 
enrolling in the Montgomery G.I. Bill education benefits program, under 
which the service member contributes $100 per month for 12 months while 
in service and then later may receive up to $1,004 per month in 
education benefits for up to 36 months. Currently, mobilized reservists 
receive some portion of the active duty benefit depending on the length 
of their activation. Under the Welcome Home G.I. Bill, our Iraq and 
Afghanistan veterans both active duty and mobilized reserve component 
troops would receive education or job training benefits worth a maximum 
of $75,000 over 48 months. So this bill basically adds a little more 
than $500 per month to the current benefit and extends it for an extra 
year. The benefit could also be used to repay student loans. In 
addition, qualifying troops who previously enrolled in the Montgomery 
G.I. Bill program would have their contribution refunded.
  Finally, the Welcome Home G.I. Bill helps our returning veterans 
realize the American dream of owning their own home. For a 5-year 
period after completion of their qualifying service, returning veterans 
may receive a tax-free $5,000 down payment for the first-time purchase 
of a home.
  Our veterans who have endured the burdens of war, under the most 
trying conditions, at tremendous personal risk and sacrifice, deserve 
more than they are currently provided by this Nation upon their return. 
They deserve the improved health care, education and job training, and 
home-ownership assistance which this bill provides. I invite my 
colleagues to join me in supporting this bill.
                                 ______
                                 
      Mr. COLEMAN (for himself and Mr. Pryor):
  S. 1020. A bill to make the United States competitive in a global 
economy; to the Committee on Finance.
  Mr. COLEMAN. Mr. President, today I am introducing legislation to 
help the United States compete in an increasingly global economy in 
order to keep and to grow good paying, high quality jobs here at home. 
I am very pleased to be joined by my very good friend and colleague, 
Senator Mark Pryor, who cares as deeply about these issues as I do.
  In recent years much has been written about globalization--especially 
the ``outsourcing'' of American jobs overseas. In fact, my hometown 
paper, the St. Paul Pioneer Press recently ran an editorial 
highlighting a survey done by the Federal Reserve that shows despite 
all the talk of ``outscouring'' and ``lost jobs'', globalization has 
resulted in more jobs and more money for Minnesota's workers. I ask 
unanimous consent that this article be included in the record along 
with my statement. However, that same editorial warned that as China, 
India and the European Union work to expand their own market 
opportunities by modernizing their infrastructure and improving the 
skills of their workforce, there is no guarantee that the world's best 
companies will continue to invest here at home.
  Yet, at the same time that the Labor Department has projected that 
new jobs requiring advanced science, engineering and technical training 
will increase four times faster than the average national job growth 
rate, only 36 percent of 9th-12th graders in Minnesota are taking upper 
level math courses, and only 22 percent of are taking upper level 
science. Moreover, in a high tech economy that values knowledge and 
ideas as much as the products they produce the U.S. Patent and 
Trademark Office (PTO) has reported that the time it takes someone to 
get a patent is exploding. The facts read loud and clear: in order to 
maintain our place as the leader in tomorrow's economy, America must 
act now to maintain our competitive advantage and remain ahead of the 
curve.
  That is why we are introducing the Collaborative Opportunities to 
Mobilize and Promote Education, Technology, and Enterprise Act of 2005 
or the COMPETE ACT of 2005. The COMPETE Act is based on three simple, 
fundamental ideas: 1. The U.S. needs to maintain its competitive 
advantage in robust technology and innovation; 2. We must continue to 
``upskill'' our workforce to ensure they have the skills necessary to 
remain competitive in a global economy that is more reliant on 
technology than ever before; and 3. We must utilize private-public 
partnerships to help improve education in the areas of science, 
technology, engineering and mathematics.
  America's economic strength is rooted in its ability to innovate, and 
so the COMPETE Act strengthens and expands the R&D tax credit. 
Expanding the R&D tax credit will help American companies to stay on 
the forefront of the technological revolution. This credit helps fuel 
job creation here at home and enables companies to bring more products 
and services to market.
  The COMPETE Act also reforms and improves the U.S. Patent Trademark 
Office (PTO). It is no secret that patents and trademarks are the 
currency that drives America's high-tech economy. Unfortunately, the 
PTO estimates that it will take an average of 49 months by 2009 for it 
to issue a patent. This is a lifetime when you are innovating, and 
discourages new ideas. Furthermore, the current backlog on patent 
applications now totals almost a half million--the highest ever. 
Fortunately, the PTO has come up with a solution to this problem. 
However, it does not have the money to implement it. The COMPETE Act 
provides the PTO with the crucial funding necessary to reform the 
patent and trademark process so that U.S. companies remain on the 
forefront of the technological revolution.
  Today, our employers need more than just raw materials; they need a 
highly skilled workforce who adds that extra value to their product. 
That is why the COMPETE Act establishes a tax credit that will help 
``upskill'' America's workers so that they can compete in an economy 
increasingly more dependent on information, communication and 
technology (ICT) skills. Indeed, ICT skills are today's newest raw 
material and are the infrastructure America needs to be a leader in 
today's global market.
  To help close the math and science gap, the COMPETE Act creates a 
public-partnership that will leverage the expertise and resources of 
the private sector and those in the university community to establish 
joint regional training and research centers. These centers will 
provide training and technical assistance to teachers so they will be 
better equipped to get students interested in math and science at an 
early age.
  The COMPETE Act rewards high performing schools in math and science 
and at the same time provides an incentive for businesses to get more 
involved in helping high-need schools to improve in the areas of math 
and science. Finally, the COMPETE Act establishes a matching grant 
program where federal and private resources will be used to help 
graduate students in science, technology, engineering and mathematics 
meet the cost of getting a graduate degree. This grant program will 
also support outreach and mentoring activities to increase the 
participation of underrepresented groups in these fields at every level 
of education.
  Today is the time to prepare for tomorrow and the COMPETE Act 
represents an important step in helping to prepare the U.S. to succeed 
in meeting the challenges of a rapidly changing world. The COMPETE Act 
will help the U.S. remain ahead of the curve when it

[[Page 9550]]

comes to competing in today's global economy. That is why a number of 
diverse organizations, including the R&D Credit Coalition, National 
Council of Teachers of Mathematics, National Science Teachers 
Association, Computing Technology Industry Association (CompTIA), 
American Association for the Advancement of Science, National 
Association of State Universities & Land-Grant Universities, ASSE 
Engineering Deans Council, Council of Graduate Schools, American 
Society for Training & Development, Association of American 
Universities, and the Intellectual Property Owners Association support 
one or may of tile provisions of the COMPETE Act.
  I ask unanimous consent that their letters of support be printed in 
the Record.
  Today our economy is both more vulnerable and more successful than it 
has ever been. To ensure that we are maximizing our chances for 
success, we need to help employees and individuals innovate. We need to 
have a workforce that has the skills necessary to compete in a 
worldwide economy that is increasingly dependent on technology. We need 
to focus on math and science education to ensure that America continues 
to produce the best engineers and scientists in the world. And above 
all, we need to do those things necessary to make the U.S. the best 
place to do business in the world. The bottom line is we all want 
America's moms and dads to enjoy good paying jobs here at home so they 
can do what every mom and dad wants to do and that is give our kids a 
better life than we had. That's what the COMPETE Act is all about.
  There being no objection, the letters were ordered to be printed in 
the Record, as follows:

            [From the St. Paul Pioneer Press, Dec. 19, 2004]

               Minnesota Must Compete in a Global Economy

       The Federal Reserve Bank of Minneapolis recently published 
     the findings of the annual survey conducted by Minnesota 
     Technology Inc. and the Minnesota Department of Employment 
     and Economic Development. The clear message from Minnesota 
     businesses is that globalization is here to stay and it's not 
     all bad.
       ``It's the new hard reality,'' said Ron Kirscht, president 
     of Donnelly Custom Manufacturing Co. in Alexandria.
       Indeed, for all the hand wringing over outsourcing and the 
     fact that Bemidji has to compete with Bangalore, it's clear 
     that an increasingly global economy has been a net gain for 
     Minnesota.
       ``The results showed that state manufacturers and service 
     providers in industries most likely to be affected by 
     globalization are integrating rapidly into the global 
     community, whether through importing, exporting, off shoring 
     or foreign direct investment,'' the Fed said in fedgazette, 
     its monthly publication.
       For instance, a dozen years ago, Donnelly did very little 
     importing and no exporting. Today it imports components, 
     materials and tools, and exports its custom-built products 
     around the world.
       ``We couldn't compete if we didn't,'' Kirscht said.
       Some executives even admit that globalization has made them 
     more competitive.
       ``There's always the feeling that the fewer the competitors 
     the better,'' said Steven Cheppard, CEO of Kenyon-based 
     Foldcraft Co. ``But in a sort of convoluted fashion it is 
     possible to make a positive out of this. It forces us to make 
     ourselves better and better.''
       According to the survey, about 21 percent of respondents 
     were importers and 32 percent exporters in 1998. Today both 
     numbers are around 40 percent.
       About 20 percent of those surveyed reported increased 
     employment and production during the same period. On wages, 
     about 43 percent of businesses expect them to increase; 38 
     percent see no changes and 19 percent see a decrease due to 
     increased global competition. Perhaps more important, 
     businesses expect to add more new production jobs between now 
     and 2008 than they did between 1998 and 2003.
       Not surprisingly, the top three reasons cited for 
     outsourcing and importing were to reduce or control costs, 
     increase revenue and increase overall competitiveness. About 
     43 percent of those surveyed said the cost of employee health 
     care benefits was a key factor in their decision to move jobs 
     offshore or out of state. About one-third said wages and 
     taxes chased them out of Minnesota.
       Team Industries, a designer and manufacturer of power 
     trains for recreational vehicles, has manufacturing plants in 
     six Minnesota cities, and a market reach that extends around 
     the globe. Jason Roue, general manager at the company's 
     Baxter plant in central Minnesota, noted that in the past few 
     years the company has expanded its network of global 
     sourcing.
       It now imports lower-cost parts and raw materials from 
     around the world, but at the same time have seen significant 
     export growth as international demand for its products has 
     increased.
       ``If we plan on staying in business, we're going to have to 
     adapt,'' said Roue. ``By adopting global sourcing and lean 
     manufacturing techniques, and by differentiating ourselves 
     from foreign competitors, mainly in China and Korea, we think 
     we can meet the challenge of global competition.''
       The Fed notes that regardless of how businesses ``feel'' 
     about globalization, ``they seem to understand that 
     membership is not negotiable, but required. ``
       We agree. Furthermore, we'd argue that when state and local 
     lawmakers are considering new taxes and regulations, even 
     with a projected budget shortfall of $1.4 billion, they also 
     need to consider how our regimen compares with not just 
     Seattle and Shreveport, but Shanghai and Singapore. For the 
     Fed study makes clear that the world--not just the country--
     is increasingly the competitive landscape on which Minnesota 
     must compete.
                                  ____

                                      Intellectual Property Owners


                                                  Association,

                                     Washington, DC, May 12, 2005.
     Hon. Norm Coleman,
     Senate Hart Office Building,
     Washington, DC.
     Hon. Mark Pryor,
     Senate Dirksen Office Building,
     Washington, DC.
       Dear Senators Coleman and Pryor: Intellectual Property 
     Owners Association (IPO) writes to voice its strong support 
     for Title III of the COMPETE Act of 2005. As you know, IPO 
     has long advocated ending diversion of the user fees paid by 
     patent and trademark applicants to the U.S. Patent and 
     Trademark Office (USPTO) and Title III of the COMPETE Act of 
     2005 would accomplish this goal.
       Intellectual property rights including patents and 
     trademarks are the currency that drives America's high-tech 
     economy. Yet, the USPTO currently faces not only a workload 
     crisis, but also questions about the quality of the patents 
     it grants.
       IPO's recommended objectives for the USPTO are to: (1) 
     improve patent quality, (2) reduce the time it takes 
     applicants to get a patent, and (3) achieve cost 
     effectiveness in all operations. IPO has supported the 
     USPTO's ``21st Century Strategic Plan'' as a way to achieve 
     these objectives, but until now, the USPTO has been hampered 
     by lack of funding. Last year, Congress passed legislation 
     raising patent application fees by 15 to 25 percent. The fee 
     increase will provide more than $200 million a year in 
     additional revenue to the USPTO through September 2006; 
     however, a long term solution to USPTO's funding problems is 
     still needed.
       America's innovators remain prepared to pay out of our own 
     pockets to improve the situation at the PTO provided that the 
     money will go to the agency and not be diverted to unrelated 
     programs. This fear is not unfounded, given that Congress 
     diverted more than three-quarters of a billion dollars of 
     fees paid by patent and trademark applicants to unrelated 
     government programs from 1992 until 2004.
       IPO firmly believes that it is reasonable and just that the 
     USPTO keep 100 percent of its own patent and trademark fees. 
     To allow for anything less would be a disservice to inventors 
     and entrepreneurs and a drag on our nation's competitiveness 
     and productivity.
       We thank you for supporting America's innovators by 
     introducing legislation that would end the practice of fee 
     diversion, and we are committed to working with you to ensure 
     that such legislation is enacted into law.
           Sincerely,
                                               Herbert C. Wamsley,
     Executive Director.
                                  ____

                                              American Society for


                                     Training and Development,

                                     Alexandria, VA, May 11, 2005.
     Hon. Norm Coleman,
     U.S. Senate,
     Washington, DC.
       Dear Senator Coleman: On behalf of the American Society for 
     Training & Development (ASTD), thank you for introducing the 
     Collaborative Opportunities to Mobilize and Promote 
     Education, Technology, and Enterprise Act of 2005 (COMPETE 
     Act). As the world's largest association dedicated to 
     training, workplace learning, and performance professionals, 
     ASTD is acutely aware that one of the most critical issues 
     facing organizations today is developing the knowledge and 
     capabilities of the workforce. Your bill is a big step in the 
     right direction to ensuring that the U.S. workforce remains 
     competitive in the global economy.
       Sections 111-112 of Title I, the Tax Credit for Information 
     and Communications Technology Education and Training Program 
     Expenses, are of particular interest to ASTD. This tax credit 
     can benefit all U.S. companies because every industry 
     requires IT skills, not just IT-based companies. According to 
     ASTD's 2004 State of the Industry Report, one of the most 
     important content

[[Page 9551]]

     areas in which employees are trained in U.S. organizations is 
     IT and systems training. A tax credit for expenses paid or 
     incurred for IT training demonstrates a targeted solution for 
     both employer and employee (or an unemployed individual). 
     Employers identify what training is needed; employees are 
     able to train or upskill in industries that need skilled 
     workers. And because employers or individuals are required to 
     pay half the training or educational costs, there is a 
     greater likelihood that the program will be successful. ASTD 
     therefore supports your efforts to include these sections in 
     the COMPETE Act.
       Many businesses find themselves ill-equipped to grow 
     because the skills required to meet demand for growth are in 
     short supply in their organizations. A full 66 percent of 
     respondents to a recent ASTD poll say there is a skills gap 
     in their organizations right now, and almost 20 percent say 
     there will be one within the next year. The best approach for 
     addressing the skills gap is the COMPETE Act's solution of 
     providing government incentives that enable the private 
     sector to train or educate more people in the industries in 
     which skilled workers are needed.
       The COMPETE Act is an excellent example of a public-private 
     partnership that can ensure companies remain competitive, and 
     individuals seek the education they need to enter or re-enter 
     the workforce. We look forward to working with you and your 
     staff as this bill progresses through the Senate.
           Sincerely,
                                                     Tony Bingham,
     President & CEO.
                                  ____



                                  Council of Graduate Schools,

                                                   Washington, DC.
     Hon. Norm Coleman,
     U.S. Senate, Washington, DC.
     Hon. Mark Pryor,
     U.S. Senate, Washington, DC.
       Dear Senators Coleman and Pryor: I am writing to commend 
     you for supporting our nation's economic competitiveness 
     through the introduction of the Collaborative Opportunities 
     to Mobilize and Promote Education, Technology and Enterprise 
     (COMPETE) Act. The Council of Graduate Schools (CGS) and its 
     460 plus member institutions are very grateful for your 
     leadership in addressing the important issue of American 
     competitiveness.
       CGS is committed to collaborating with you and others on 
     developing a coordinated national strategy to enhance 
     America's competitiveness. The European Union, China, India 
     and many other countries are making large investments in 
     education, research and development, greatly expanding their 
     ability to compete in the global economy. The United States 
     cannot afford to coast on its past successes and must invest 
     now to maintain our economic preeminence and national 
     security in the years ahead.
       The policy changes you propose include providing a new 
     matching fund program to promote competitiveness through 
     graduate education, extension and enhancement of the R&D tax 
     credit, and improvements to the Federal patent and trademark 
     process. These policy proposals along with others designed to 
     support math and science education in elementary and 
     secondary schools establish a solid foundation for a longer-
     term, comprehensive agenda designed to maintain our nation's 
     leadership in innovation, research and discovery.
       We are also appreciative of your additional legislative 
     efforts to increase global competition for the best and the 
     brightest. As you know, the U.S. must continue welcoming 
     qualified international students to our country and 
     simultaneously implementing policies to address declining 
     participation of domestic students across key fields in 
     science, technology, engineering, mathematics and critical 
     foreign languages.
       Thank you for your leadership in addressing American 
     competitiveness and for supporting the vital role played by 
     graduate education as a key part of our national strategy to 
     maintain our leadership in the global economy.
           Sincerely,
                                                 Debra W. Stewart.

  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1020

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the 
     ``Collaborative Opportunities to Mobilize and Promote 
     Education, Technology, and Enterprise Act of 2005'' or the 
     ``COMPETE Act of 2005''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.

                        TITLE I--TAX INCENTIVES

                      Subtitle A--Research credit

Sec. 101. Extension of research credit.
Sec. 102. Increase in rates of alternative incremental credit.
Sec. 103. Alternative simplified credit for qualified research 
              expenses.

                         Subtitle B--Education

Sec. 111. Credit for information and communications technology 
              education and training program expenses.
Sec. 112. Eligible educational institution.
Sec. 113. Alternative percentage limitation for corporate charitable 
              contributions to the mathematics and science partnership 
              program.

                     TITLE II--EDUCATION PROVISIONS

Sec. 201. Regional training and research centers.
Sec. 202. Math and science partnership bonus grants.
Sec. 203. Matching funds program to promote American competitiveness 
              through graduate education.

    TITLE III--UNITED STATES PATENT AND TRADEMARK FEE MODERNIZATION

Sec. 301. Patent and Trademark Office funding.

                        TITLE I--TAX INCENTIVES

                      Subtitle A--Research Credit

     SEC. 101. EXTENSION OF RESEARCH CREDIT.

       (a) In General.--Subsection (h) of section 41 of the 
     Internal Revenue Code of 1986 (relating to termination) is 
     amended by striking ``2005'' and inserting ``2007''.
       (b) Conforming Amendment.--Subparagraph (D) of section 
     45C(b)(1) of such Code is amended by striking ``2005'' and 
     inserting ``2007''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred after the date of the 
     enactment of this Act.

     SEC. 102. INCREASE IN RATES OF ALTERNATIVE INCREMENTAL 
                   CREDIT.

       (a) In General.--Subparagraph (A) of section 41(c)(4) of 
     the Internal Revenue Code of 1986 (relating to election of 
     alternative incremental credit) is amended--
       (1) by striking ``2.65 percent'' and inserting ``3 
     percent'';
       (2) by striking ``3.2 percent'' and inserting ``4 
     percent''; and
       (3) by striking ``3.75 percent'' and inserting ``5 
     percent''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.

     SEC. 103. ALTERNATIVE SIMPLIFIED CREDIT FOR QUALIFIED 
                   RESEARCH EXPENSES.

       (a) In General.--Subsection (c) of section 41 of the 
     Internal Revenue Code of 1986 (relating to base amount) is 
     amended by redesignating paragraphs (5) and (6) as paragraphs 
     (6) and (7), respectively, and by inserting after paragraph 
     (4) the following new paragraph:
       ``(5) Election of alternative simplified credit.--
       ``(A) In general.--At the election of the taxpayer, the 
     credit determined under subsection (a)(1) shall be equal to 
     12 percent of so much of the qualified research expenses for 
     the taxable year as exceeds 50 percent of the average 
     qualified research expenses for the 3 taxable years preceding 
     the taxable year for which the credit is being determined.
       ``(B) Special rule in case of no qualified research 
     expenses in any of 3 preceding taxable years.--
       ``(i) Taxpayers to which subparagraph applies.--The credit 
     under this paragraph shall be determined under this 
     subparagraph if the taxpayer has no qualified research 
     expenses in any 1 of the 3 taxable years preceding the 
     taxable year for which the credit is being determined.
       ``(ii) Credit rate.--The credit determined under this 
     subparagraph shall be equal to 6 percent of the qualified 
     research expenses for the taxable year.
       ``(C) Election.--An election under this paragraph shall 
     apply to the taxable year for which made and all succeeding 
     taxable years unless revoked with the consent of the 
     Secretary. An election under this paragraph may not be made 
     for any taxable year to which an election under paragraph (4) 
     applies.''.
       (b) Coordination With Election of Alternative Incremental 
     Credit.--
       (1) In general.--Section 41(c)(4)(B) of the Internal 
     Revenue Code of 1986 (relating to election) is amended by 
     adding at the end the following: ``An election under this 
     paragraph may not be made for any taxable year to which an 
     election under paragraph (5) applies.''.
       (2) Transition rule.--In the case of an election under 
     section 41(c)(4) of the Internal Revenue Code of 1986 which 
     applies to the taxable year which includes the date of the 
     enactment of this Act, such election shall be treated as 
     revoked with the consent of the Secretary of the Treasury if 
     the taxpayer makes an election under section 41(c)(5) of such 
     Code (as added by subsection (a)) for such year.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.

[[Page 9552]]



                         Subtitle B--Education

     SEC. 111. CREDIT FOR INFORMATION AND COMMUNICATIONS 
                   TECHNOLOGY EDUCATION AND TRAINING PROGRAM 
                   EXPENSES.

       (a) In General.--Subpart B of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 is amended by 
     adding at the end the following:

     ``SEC. 30B. INFORMATION AND COMMUNICATIONS TECHNOLOGY 
                   EDUCATION AND TRAINING PROGRAM EXPENSES.

       ``(a) Allowance of Credit.--There shall be allowed as a 
     credit against the tax imposed by this chapter for the 
     taxable year an amount equal to 50 percent of information and 
     communications technology education and training program 
     expenses paid or incurred by the taxpayer for the benefit 
     of--
       ``(1) in the case of a taxpayer engaged in a trade or 
     business, an employee of the taxpayer, or
       ``(2) in the case of a taxpayer who is an individual not so 
     engaged, such individual.
       ``(b) Limitations.--
       ``(1) Employers.--In the case of any taxpayer described in 
     subsection (a)(1), the amount of expenses which may be taken 
     into account under subsection (a) for the taxable year shall 
     not exceed the greater of--
       ``(A) the excess of--
       ``(i) the sum of--

       ``(I) $10,000 multiplied by the number of qualified 
     individuals who are employees and with respect to whom the 
     taxpayer has paid or incurred information and communications 
     technology education and training expenses, plus
       ``(II) $8,000 multiplied by the number of all other 
     employees with respect to whom the taxpayer has paid or 
     incurred such expenses, over

       ``(ii) the average amount of such expenses paid or incurred 
     by the taxpayer with respect to all employees for the 3 
     preceding taxable years, or
       ``(B) the sum of--
       ``(i) $4,000 multiplied by the number of qualified 
     individuals who are employees and with respect to whom the 
     taxpayer has paid or incurred such expenses, plus
       ``(ii) $2,500 multiplied by the number of all other 
     employees with respect to whom the taxpayer has paid or 
     incurred such expenses.
       ``(2) Individuals.--The amount of expenses with respect to 
     any individual described in subsection (a)(2) which may be 
     taken into account under subsection (a) for the taxable year 
     shall not exceed $2,500 ($4,000 in the case of a qualified 
     individual).
       ``(3) Coordination of credits.--
       ``(A) In general.--The credit under subsection (a)(1) 
     allowed to an employer with respect to any employee shall be 
     reduced by the coordination exclusion amount.
       ``(B) Portion of credit allowable.--For purposes of 
     subparagraph (A), the coordination exclusion amount is an 
     amount which bears the same ratio to the applicable 
     limitation as--
       ``(i) the amount (if any) of the limitation applicable to 
     such employee under subsection (b)(2) which such employee 
     does not assign to such employer, bears to
       ``(ii) $2,500 ($4,000 in the case of an employee who is a 
     qualified individual).
       ``(C) Applicable limitation.--For purposes of subparagraph 
     (B), the term `applicable limitation' means the amount under 
     paragraph (2) with respect to such employee which is used by 
     such employer to calculate the limitation under such 
     paragraph.
       ``(4) Qualified individual.--The term `qualified 
     individual' means an individual--
       ``(A) with respect to whom all information and 
     communications technology education and training program 
     expenses are paid or incurred in connection with a program 
     operated--
       ``(i) in an empowerment zone or enterprise community 
     designated under part I of subchapter U or a renewal 
     community designated under part I of subchapter X,
       ``(ii) in a school district in which at least 50 percent of 
     the students attending schools in such district are eligible 
     for free or reduced-cost lunches under the school lunch 
     program established under the Richard B. Russell National 
     School Lunch Act,
       ``(iii) in an area designated as a disaster area by the 
     Secretary of Agriculture or by the President under the Robert 
     T. Stafford Disaster Relief and Emergency Assistance Act in 
     the taxable year or any of the 4 preceding taxable years,
       ``(iv) in a rural enterprise community designated under 
     section 766 of the Agriculture, Rural Development, Food and 
     Drug Administration, and Related Agencies Appropriations Act, 
     1999,
       ``(v) in an area designated by the Secretary of Agriculture 
     as a Rural Economic Area Partnership Zone,
       ``(vi) in an area over which an Indian tribal government 
     (as defined in section 7701(a)(40)) has jurisdiction, or
       ``(vii) by an employer who has 200 or fewer employees for 
     each business day in each of 20 or more calendar weeks in the 
     current or preceding calendar year,
       ``(B) with a disability, or
       ``(C) who is receiving a benefit under chapter 2 of title 
     II of the Trade Act of 1974.
       ``(c) Information Technology Education and Training Program 
     Expenses.--For purposes of this section--
       ``(1) In general.--The term `information technology 
     education and training program expenses' means expenses paid 
     or incurred by reason of the participation of the taxpayer 
     (or any employee of the taxpayer) in any information and 
     communications technology education and training program. 
     Such expenses shall include expenses paid in connection 
     with--
       ``(A) course work,
       ``(B) certification testing,
       ``(C) programs carried out under the Act of August 16, 1937 
     (50 Stat. 664, chapter 663; 29 U.S.C. 50 et seq), which are 
     registered by the Department of Labor, and
       ``(D) other expenses that are essential to assessing skill 
     acquisition.
       ``(2) Information technology education and training 
     program.--The term `information technology education and 
     training program' means a training program in information and 
     communications technology workplace disciplines or which is 
     provided in the United States by an accredited college, 
     university, private career school, postsecondary educational 
     institution, a commercial information technology provider, or 
     an employer-owned information technology training 
     organization.
       ``(3) Commercial information technology training 
     provider.--The term `commercial information technology 
     training provider' means a private sector organization 
     providing an information and communications technology 
     education and training program.
       ``(4) Employer-owned information technology training 
     organization.--The term `employer-owned information 
     technology training organization' means a private sector 
     organization that provides information technology training to 
     its employees using internal training development and 
     delivery personnel. The training programs must use industry-
     recognized training disciplines and evaluation methods, 
     comparable to institutional and commercial training 
     providers.
       ``(d) Denial of Double Benefit.--
       ``(1) Disallowance of other credits and deductions.--No 
     deduction or credit shall be allowed under any other 
     provision of this chapter for expenses taken into account in 
     determining the credit under this section.
       ``(2) Reduction for hope and lifetime learning credits.--
     The amount taken into account under subsection (a) shall be 
     reduced by the information technology education and training 
     program expenses taken into account in determining the 
     credits under section 25A.
       ``(e) Certain Rules Made Applicable.--For purposes of this 
     section, rules similar to the rules of section 45A(e)(2) and 
     subsections (c), (d), and (e) of section 52 shall apply.
       ``(f) Application With Other Credits.--The credit allowed 
     by subsection (a) for any taxable year shall not exceed the 
     excess (if any) of--
       ``(1) the sum of the regular tax liability (as defined by 
     section 26(b)) plus the tax imposed by section 55, over
       ``(2) the sum of the credits allowable under subpart A and 
     section 27 for the taxable year.
       ``(g) Inflation Adjustments.--In the case of a taxable year 
     beginning after 2004, each of the dollar amounts under 
     paragraphs (1), (2), and (3) of subsection (b) shall be 
     increased by an amount equal to--
       ``(1) such dollar amount, multiplied by
       ``(2) the cost-of-living adjustment determined under 
     section 1(f)(3) of the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 2003' 
     for `calendar year 1992' in subparagraph (B) thereof.

     If any amount as adjusted under the preceding sentence is not 
     a multiple of $100, such amount shall be rounded to the next 
     lowest multiple of $100.''.
       (b) Clerical Amendment.--The table of sections for subpart 
     B of part IV of subchapter A of chapter 1 of the Internal 
     Revenue Code of 1986 is amended by adding at the end the 
     following:

``Sec. 30B. Information and communications technology education and 
              training program expenses.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred in taxable years 
     beginning after December 31, 2004.

     SEC. 112. ELIGIBLE EDUCATIONAL INSTITUTION.

       (a) In General.--Section 25A(f)(2) of the Internal Revenue 
     Code of 1986 (relating to eligible educational institution) 
     is amended to read as follows:
       ``(2) Eligible educational institution.--The term `eligible 
     educational institution' means--
       ``(A) an institution--
       ``(i) which is described in section 101(b) or 102(a) of the 
     Higher Education Act of 1965, and
       ``(ii) which is eligible to participate in a program under 
     title IV of such Act, or
       ``(B) a commercial information and communications 
     technology training provider (as defined in section 
     30B(c)(3)).''.
       (b) Conforming Amendment.--The second sentence of section 
     221(d)(2) of the Internal Revenue Code of 1986 is amended by 
     striking ``section 25A(f)(2)'' and inserting ``section 
     25A(f)(2)(A)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2004.

[[Page 9553]]



     SEC. 113. ALTERNATIVE PERCENTAGE LIMITATION FOR CORPORATE 
                   CHARITABLE CONTRIBUTIONS TO THE MATHEMATICS AND 
                   SCIENCE PARTNERSHIP PROGRAM.

       (a) In General.--Section 170(b) of the Internal Revenue 
     Code of 1986 (related to percentage limitations) is amended 
     by adding at the end the following new paragraph:
       ``(3) Special rule for corporate contributions to the 
     mathematics and science partnership program.--
       ``(A) In general.--In the case of a corporation which makes 
     an eligible mathematics and science contribution--
       ``(i) the limitation under paragraph (2) shall apply 
     separately with respect to all such contributions and all 
     other charitable contributions, and
       ``(ii) paragraph (2) shall be applied with respect to all 
     eligible mathematics and science contributions by 
     substituting `15 percent' for `10 percent'.
       ``(B) Eligible mathematics and science contribution.--
       ``(i) In general.--For purposes of this paragraph, the term 
     `eligible mathematics and science contribution' means a 
     charitable contribution (other than a contribution of used 
     equipment) to a qualified partnership for the purpose of an 
     activity described in section 2202(c) of the Elementary and 
     Secondary Education Act of 1965..
       ``(ii) Qualified partnership.--The term `qualified 
     partnership' means an eligible partnership (within the 
     meaning of section 2201(b)(1) of the Elementary and Secondary 
     Education Act of 1965), but only to the extent that such 
     partnership does not include a person other than a person 
     described in paragraph (1)(A).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions made after the date of the 
     enactment of this Act.

                     TITLE II--EDUCATION PROVISIONS

     SEC. 201. REGIONAL TRAINING AND RESEARCH CENTERS.

       (a) Centers Established.--From amounts appropriated under 
     subsection (f), the Director of the National Science 
     Foundation shall award grants, on a competitive basis, to 
     eligible entities to enable the eligible entities to 
     establish 10 regional training and research centers to help 
     maintain the Nation's workforce and education investment and 
     infrastructure in the sciences, technology, engineering, and 
     mathematics.
       (b) Eligible Entity Defined.--In this section the term 
     ``eligible entity'' means a partnership between an 
     institution of higher education and 1 or more of the 
     following entities:
       (1) A research organization.
       (2) An organization described in section 501(c)(3) of the 
     Internal Revenue Code of 1986 that--
       (A) is exempt from taxation under section 501(a) of such 
     Code; and
       (B) has expertise in the sciences, technology, engineering, 
     or mathematics.
       (3) A trade or business.
       (c) Location.--The Director of the National Science 
     Foundation shall award a grant for the establishment of 1 
     regional training and research center in each of the 10 
     geographic regions of the United States that is served by a 
     regional educational laboratory under section 174 of the 
     Education Sciences Reform Act of 2002 (20 U.S.C. 9564).
       (d) Designation.--Each regional training and research 
     center established under this section shall be known as a 
     ``Making America Competitive Center'' (MAC Center).
       (e) Use of Funds.--
       (1) In general.--Each eligible entity receiving a grant 
     under this section shall use the grant funds to establish a 
     regional training and research center that--
       (A) provides training, technical assistance, and 
     professional development in the sciences, technology, 
     engineering, and mathematics, to or for States, local 
     educational agencies, qualified teachers, and schools, in the 
     region served by the regional training and research center;
       (B)(i) develops and funds joint cooperative programs, for 
     qualified teachers and students, with a trade or business 
     related to the sciences, technology, engineering, or 
     mathematics; and
       (ii) develops instructional materials and teaching methods 
     in the areas of the sciences, technology, engineering, and 
     mathematics for use in primary and secondary schools in the 
     region served by the center; and
       (C) builds networks among the sciences, technology, 
     engineering, and mathematics resources within the 10 regions 
     and nationally.
       (2) Qualified teacher.--For purposes of paragraph (1)(B), 
     the term ``qualified teacher'' means any individual who--
       (A) teaches one or more courses in grades 4 through 12 
     primarily in--
       (i) science;
       (ii) computer science;
       (iii) occupational preparation with respect to vocational 
     and technical occupations;
       (iv) engineering; or
       (v) mathematics; or
       (B)(i) received a baccalaureate or similar degree with a 
     major or a minor in the sciences, technology, engineering, or 
     mathematics from a college, university, vocational school, or 
     other postsecondary institution eligible to participate in a 
     student aid program administered by the Department of 
     Education; and
       (ii) is a teacher who is highly qualified (within the 
     meaning of section 9101(23) of the Elementary and Secondary 
     Education Act of 1965).
       (f) Authorization of Appropriations.--There are authorized 
     to be appropriated to carry out this section--
       (1) $200,000,000 for fiscal year 2006;
       (2) $210,000,000 for fiscal year 2007;
       (3) $230,000,000 for fiscal year 2008;
       (4) $270,000,000 for fiscal year 2009; and
       (5) $350,000,000 for fiscal year 2010.

     SEC. 202. MATH AND SCIENCE PARTNERSHIP BONUS GRANTS.

       Part B of title II of the Elementary and Secondary 
     Education Act of 1965 (20 U.S.C. 6661 et seq.) is amended by 
     adding at the end the following:

     ``SEC. 2204. MATH AND SCIENCE PARTNERSHIP BONUS GRANTS.

       ``(a) In General.--From amounts appropriated under 
     subsection (d), the Secretary shall award a grant--
       ``(1) for each of the school years 2005-2006 through 2014-
     2015, to each of the 5 elementary schools and each of the 5 
     secondary schools in a State whose students demonstrate the 
     most improvement in mathematics, as measured by the 
     improvement in the students' average score on the State's 
     assessments in mathematics from the school year preceding the 
     school year for which the grant is awarded to the school year 
     for which the grant is awarded; and
       ``(2) for each of the school years 2009-2010 through 2014-
     2015, to each of the 5 elementary schools and each of the 5 
     secondary schools in a State whose students demonstrate the 
     most improvement in science, as measured by the improvement 
     in the students' average score on the State's assessments in 
     science from the school year preceding the school year for 
     which the grant is awarded to the school year for which the 
     grant is awarded.
       ``(b) Grant Amount.--The amount of each grant awarded under 
     this section shall be $500,000.
       ``(c) Applicability.--Sections 2201, 2202, and 2203 shall 
     not apply to this section.
       ``(d) Authorization of Appropriations.--There are 
     authorized to be appropriated to carry out this section 
     $130,000,000 for each of fiscal years 2006 through 2009, and 
     $260,000,000 for each of fiscal years 2010 through 2015.''.

     SEC. 203. MATCHING FUNDS PROGRAM TO PROMOTE AMERICAN 
                   COMPETITIVENESS THROUGH GRADUATE EDUCATION.

       (a) Purpose.--The purpose of this section is to promote 
     America's economic competitiveness and job creation by--
       (1) assisting graduate students studying the sciences, 
     technology, engineering, and mathematics;
       (2) advancing education in the sciences, technology, 
     engineering, and mathematics;
       (3) stimulating greater links between private industry and 
     graduate education; and
       (4) enabling the Office of Science of the Department of 
     Energy to establish a matching funds program for eligible 
     institutions of higher education.
       (b) Definitions.--In this section:
       (1) Eligible institution of higher education.--The term 
     ``eligible institution of higher education'' means an 
     institution of higher education, as defined in section 101(a) 
     of the Higher Education Act of 1965 (20 U.S.C. 1001), that--
       (A) offers an established program of post-baccalaureate 
     study leading to a graduate degree in the sciences, 
     technology, engineering, or mathematics; and
       (B) enters into a written agreement with the Director 
     pursuant to subsection (e) to carry out the authorized 
     activities described in the application submitted under 
     subsection (d).
       (2) Director.--The term ``Director'' means the Director of 
     the Office of Science of the Department of Energy.
       (c) Grants.--
       (1) Grants authorized.--The Director is authorized to award 
     grants, on a competitive basis, to eligible institutions of 
     higher education to enable the eligible institutions of 
     higher education to carry out authorized activities described 
     in subsection (e).
       (2) Matching funds required.--In order to receive a grant 
     under this subsection an eligible institution of higher 
     education shall agree to provide matching funds, toward the 
     cost of the authorized activities to be assisted under the 
     grant, in an amount equal to 25 percent of the funds received 
     under the grant.
       (3) Award considerations.--In awarding grants under this 
     subsection the Director shall take into consideration--
       (A) the demonstrated commitment of the eligible institution 
     of higher education to providing matching funds (including 
     tuition remission, tuition waivers, and other types of 
     institutional support) toward the cost of the authorized 
     activities to be assisted under the grant;
       (B) the demonstrated capacity of the eligible institution 
     of higher education to raise matching funds from private 
     sources;
       (C) the demonstrated ability of the eligible institution of 
     higher education to work with private corporations and 
     organizations to

[[Page 9554]]

     promote economic competitiveness and job creation;
       (D) the demonstrated ability of the eligible institution of 
     higher education to increase the number of the eligible 
     institution of higher education's graduates in the sciences, 
     technology, engineering, or mathematics with the 
     interdisciplinary background and the technical, professional 
     and personal skills needed to contribute to American 
     competitiveness and job creation in the future;
       (E) the potential for the grant assistance to increase the 
     number of graduates in the sciences, technology, engineering, 
     or mathematics at the eligible institution of higher 
     education; and
       (F) the demonstrated track record of the eligible 
     institution of higher education in outreach and mentoring 
     activities that have the expressed purpose of recruiting and 
     retaining women, recognized minorities, and individuals with 
     disabilities in the sciences, technology, engineering, or 
     mathematics.
       (4) Amount.--The Director shall award each grant under this 
     subsection in an amount that is not more than $1,000,000 for 
     each fiscal year.
       (5) Equitable geographic distribution.--In awarding grants 
     under this subsection the Director shall ensure--
       (A) an equitable geographic distribution of the grants; and
       (B) an equitable distribution among public and independent 
     eligible institutions of higher education.
       (d) Applications.--Each eligible institution of higher 
     education desiring a grant under this section shall submit an 
     application to the Director at such time, in such manner, and 
     accompanied by such information and assurances as the 
     Director may require. Each such application shall describe--
       (1) the authorized activities for which assistance is 
     sought;
       (2) the source and amount of the matching funds to be 
     provided; and
       (3) the amount of funds raised by the eligible institution 
     of higher education from private sources that will be 
     allocated and spent to carry out the authorized activities 
     described in subsection (e).
       (e) Authorized Activities; Agreement.--Each eligible 
     institution of higher education desiring a grant under this 
     section shall enter into a written agreement with the 
     Director under which the eligible institution of higher 
     education agrees to use all of the grant funds--
       (1) to provide stipends or other financial assistance (such 
     as tuition assistance and related expenses) for students who 
     are enrolled in graduate programs in the sciences, 
     technology, engineering, or mathematics at the eligible 
     institution of higher education; and
       (2) to support outreach and mentoring activities to 
     increase the participation of underrepresented groups in the 
     sciences, technology, engineering, or mathematics at all or 
     any level of education, including elementary, secondary and 
     post-secondary education.
       (f) Authorization of Appropriations.--There are authorized 
     to be appropriated to carry out this section--
       (1) $50,000,000 for fiscal year 2006;
       (2) $60,000,000 for fiscal year 2007;
       (3) $70,000,000 for fiscal year 2008;
       (4) $80,000,000 for fiscal year 2009; and
       (5) $90,000,000 for fiscal year 2010.

    TITLE III--UNITED STATES PATENT AND TRADEMARK FEE MODERNIZATION

     SEC. 301. PATENT AND TRADEMARK OFFICE FUNDING.

       (a) Amendment.--Section 42(c) of title 35, United States 
     Code, is amended--
       (1) by striking ``(c)'' and inserting ``(c)(1)''; and
       (2) by adding at the end the following:
       ``(2) If estimated fee collections by the Patent and 
     Trademark Office for a fiscal year exceed the amount 
     appropriated to the Office for that fiscal year, the Director 
     shall reduce fees established under section 41 of this title 
     and section 31(a) of the Act of July 5, 1946 (commonly 
     referred to as the `Trademark Act of 1946') for that fiscal 
     year or the remainder of that fiscal year so that estimated 
     collections for that fiscal year are equal to the amount 
     appropriated to the Office for that fiscal year. Such 
     reductions shall take effect on the later of October 1, of 
     that fiscal year or 2 months after the date of enactment of 
     the Act making the appropriation, and shall not be 
     retroactive.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply with respect to fiscal year 2006 and each fiscal 
     year thereafter.
                                 ______
                                 
      By Mr. ENZI (for himself and Mr. Kennedy):
  S. 1021. A bill to reauthorize the Workforce Investment Act of 1998, 
and for other purposes; to the Committee on Health, Education, Labor, 
and Pensions.
  Mr. ENZI. Mr. President I rise today to introduce the Workforce 
Investment Act Amendments of 2005. I am pleased to be joined in this 
important effort by Senator Kennedy, the Ranking Member of the Health, 
Education, Labor and Pensions Committee.
  The Workforce Investment Act (WIA), together with the Perkins Career 
and Technical Education Act, which we passed earlier this year, and the 
Higher Education Act, which we will consider in the next few months, 
will provide the important resources that are needed to adequately 
prepare our workforce with the skills that are necessary for jobs and 
careers in high wage and high skilled occupations.
  We are facing an economic challenge that threatens our ability as a 
nation to compete in the global economy. As we heard from the witnesses 
who testified at a hearing held on April 14, 2005, before the Health, 
Education, Labor and Pensions Committee, we have too few workers with 
too few skills. The skill and literacy requirements of today's and 
tomorrow's workplace cannot be met if we do not provide everyone access 
to lifelong education, training and retraining.
  Sixty percent of tomorrow's jobs will require skills that only 20 
percent of today's workers possess. About half of our current workforce 
does not have a postsecondary education degree or credential, when all 
projections are that job growth over the next decade will be in jobs 
that require some postsecondary education or training.
  Technology is demanding that everyone continue to learn and gain 
skills. In January of this year the labor force participation rate for 
individuals over the age of 16 who are willing and able to work was 
68.8 percent, the lowest in over 15 years, as more Americans conclude 
that they cannot meet the skill demands of today's workplace and choose 
to no longer participate in the workforce.
  The legislation I am introducing today helps meet these challenges. 
It is the result of a bipartisan process that began in the 108th 
Congress. It gives States and local areas the flexibility to provide 
training for jobs in high skill, high wage, and high demand 
occupations. It strengthens connections with the private sector, 
postsecondary education and training, and economic development systems 
to prepare the 21st century workforce. It improves the existing 
structure of one-stops to ensure an effective response to the changing 
needs of employers and workers in a new economy. It includes a new 
focus on entrepreneurial skills and micro-enterprises, addresses unique 
needs of small businesses and rural areas, and encourages collaboration 
locally and regionally with economic development and education.
  This legislation also amends the Adult Education and Family Literacy 
Act and the Vocational Rehabilitation Act. These amendments encourage 
coordination with K-12 schools, postsecondary education and the 
workforce system so that individuals with barriers to workforce 
participation will have an opportunity to gain the literacy, language 
or core skills they will need to enter and advance in the workplace.
  I hope that our bipartisan efforts will continue to produce the 
results that are needed as we move this bill through the Senate and 
into Conference. This legislation is critical to meeting the workforce 
challenges of the 21st century. It sends a clear message that we are 
serious about helping our workers and employers remain competitive and 
closing the skills gap that places America's long-term competitiveness 
in jeopardy.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1021

       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 ``Workforce Investment Act 
     Amendments of 2005''.

     SEC. 2. TABLE OF CONTENTS.

       The table of contents of this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.
Sec. 3. References.

[[Page 9555]]

 TITLE I--AMENDMENTS TO TITLE I OF THE WORKFORCE INVESTMENT ACT OF 1998

                        Subtitle A--Definitions

Sec. 101. Definitions.

      Subtitle B--Statewide and Local Workforce Investment Systems

Sec. 111. Purpose.
Sec. 112. State workforce investment boards.
Sec. 113. State plan.
Sec. 114. Local workforce investment areas.
Sec. 115. Local workforce investment boards.
Sec. 116. Local plan.
Sec. 117. Establishment of one-stop delivery systems.
Sec. 118. Eligible providers of training services.
Sec. 119. Eligible providers of youth activities.
Sec. 120. Youth activities.
Sec. 121. Adult and dislocated worker employment and training 
              activities.
Sec. 122. Performance accountability system.
Sec. 123. Authorization of appropriations.

                         Subtitle C--Job Corps

Sec. 131. Job Corps.

                     Subtitle D--National Programs

Sec. 141. Native American programs.
Sec. 142. Migrant and seasonal farmworker programs.
Sec. 143. Veterans' workforce investment programs.
Sec. 144. Youth challenge grants.
Sec. 145. Technical assistance.
Sec. 146. Demonstration, pilot, multiservice, research, and multistate 
              projects.
Sec. 147. National dislocated worker grants.
Sec. 148. Authorization of appropriations for national activities.

                       Subtitle E--Administration

Sec. 151. Requirements and restrictions.
Sec. 152. Reports.
Sec. 153. Administrative provisions.
Sec. 154. Use of certain real property.
Sec. 155. General program requirements.
Sec. 156. Table of contents.

                      Subtitle F--Incentive Grants

Sec. 161. Incentive grants.

                   Subtitle G--Conforming Amendments

Sec. 171. Conforming amendments.

  TITLE II--AMENDMENTS TO THE ADULT EDUCATION AND FAMILY LITERACY ACT

Sec. 201. Short title; purpose.
Sec. 202. Definitions.
Sec. 203. Authorization of appropriations.
Sec. 204. Home schools.
Sec. 205. Reservation of funds; grants to eligible agencies; 
              allotments.
Sec. 206. Performance accountability system.
Sec. 207. State administration.
Sec. 208. State distribution of funds; matching requirement.
Sec. 209. State leadership activities.
Sec. 210. State plan.
Sec. 211. Programs for corrections education and other 
              institutionalized individuals.
Sec. 212. Grants and contracts for eligible providers.
Sec. 213. Local application.
Sec. 214. Local administrative cost limits.
Sec. 215. Administrative provisions.
Sec. 216. National Institute for Literacy.
Sec. 217. National leadership activities.
Sec. 218. Integrated English literacy and civics education.
Sec. 219. Transition.

            TITLE III--AMENDMENTS TO OTHER PROVISIONS OF LAW

Sec. 301. Wagner-Peyser Act.

                TITLE IV--REHABILITATION ACT AMENDMENTS

Sec. 401. Short title.
Sec. 402. Technical amendments to table of contents.
Sec. 403. Purpose.
Sec. 404. Definitions.
Sec. 405. Administration of the Act.
Sec. 406. Reports.
Sec. 407. Carryover.

             Subtitle A--Vocational Rehabilitation Services

Sec. 411. Declaration of policy; authorization of appropriations.
Sec. 412. State plans.
Sec. 413. Eligibility and individualized plan for employment.
Sec. 414. Vocational rehabilitation services.
Sec. 415. State rehabilitation council.
Sec. 416. Evaluation standards and performance indicators.
Sec. 417. Monitoring and review.
Sec. 418. State allotments.
Sec. 419. Reservation for expanded transition services.
Sec. 420. Client assistance program.
Sec. 421. Incentive grants.
Sec. 422. Vocational rehabilitation services grants.
Sec. 423. GAO studies.

                   Subtitle B--Research and Training

Sec. 431. Declaration of purpose.
Sec. 432. Authorization of appropriations.
Sec. 433. National Institute on Disability and Rehabilitation Research.
Sec. 434. Interagency committee.
Sec. 435. Research and other covered activities.
Sec. 436. Rehabilitation Research Advisory Council.
Sec. 437. Definition.

     Subtitle C--Professional Development and Special Projects and 
                             Demonstrations

Sec. 441. Training.
Sec. 442. Demonstration and training programs.
Sec. 443. Migrant and seasonal farmworkers.
Sec. 444. Recreational programs.

               Subtitle D--National Council on Disability

Sec. 451. Authorization of appropriations.

                    Subtitle E--Rights and Advocacy

Sec. 461. Architectural and Transportation Barriers Compliance Board.
Sec. 462. Protection and advocacy of individual rights.

 Subtitle F--Employment Opportunities for Individuals With Disabilities

Sec. 471. Projects with industry.
Sec. 472. Projects with industry authorization of appropriations.
Sec. 473. Services for individuals with significant disabilities 
              authorization of appropriations.

  Subtitle G--Independent Living Services and Centers for Independent 
                                 Living

Sec. 481. State plan.
Sec. 482. Statewide Independent Living Council.
Sec. 483. Independent living services authorization of appropriations.
Sec. 484. Program authorization.
Sec. 485. Grants to centers for independent living in States in which 
              Federal funding exceeds State funding.
Sec. 486. Grants to centers for independent living in States in which 
              State funding equals or exceeds Federal funding.
Sec. 487. Standards and assurances for centers for independent living.
Sec. 488. Centers for independent living authorization of 
              appropriations.
Sec. 489. Independent living services for older individuals who are 
              blind.
Sec. 490. Program of grants.
Sec. 491. Independent living services for older individuals who are 
              blind authorization of appropriations.

                       Subtitle H--Miscellaneous

Sec. 495. Helen Keller National Center Act.

                 TITLE V--TRANSITION AND EFFECTIVE DATE

Sec. 501. Transition provisions.
Sec. 502. Effective date.

     SEC. 3. REFERENCES.

       Except as otherwise expressly provided, wherever in this 
     Act an amendment or repeal is expressed in terms of an 
     amendment to, or repeal of, a section or other provision, the 
     reference shall be considered to be made to a section or 
     other provision of the Workforce Investment Act of 1998 (29 
     U.S.C. 2801 et seq.).

 TITLE I--AMENDMENTS TO TITLE I OF THE WORKFORCE INVESTMENT ACT OF 1998

                        Subtitle A--Definitions

     SEC. 101. DEFINITIONS.

       Section 101 (29 U.S.C. 2801) is amended--
       (1) by redesignating paragraphs (1) through (4), (5) 
     through (16), (17), (18) through (41), and (42) through (53) 
     as paragraphs (2) through (5), (7) through (18), (20), (23) 
     through (46), and (48) through (59), respectively;
       (2) by inserting before paragraph (2) (as redesignated by 
     paragraph (1)) the following:
       ``(1) Accrued expenditures.--The term `accrued 
     expenditures' means charges incurred by recipients of funds 
     under this title for a given period requiring the provision 
     of funds for--
       ``(A) goods or other tangible property received;
       ``(B) services performed by employees, contractors, 
     subgrantees, subcontractors, and other payees; and
       ``(C) other amounts becoming owed under programs assisted 
     under this title for which no current services or performance 
     is required, such as annuities, insurance claims, and other 
     benefit payments.'';
       (3) in paragraph (2) (as redesignated by paragraph (1)), by 
     striking ``Except in sections 127 and 132,'' and inserting 
     ``Except in section 132,'';
       (4) by striking paragraph (5) (as redesignated by paragraph 
     (1)) and inserting the following:
       ``(5) Basic skills deficient.--The term `basic skills 
     deficient' means, with respect to an individual, that the 
     individual--
       ``(A) has English reading, writing, or computing skills at 
     or below the 8th grade level on a generally accepted 
     standardized test or a comparable score on a criterion-
     referenced test; or
       ``(B) is unable to compute or solve problems, read, write, 
     or speak English at a level necessary to function on the job, 
     in the individual's family, or in society.'';
       (5) by inserting after paragraph (5) (as redesignated by 
     paragraph (1)) the following:
       ``(6) Business intermediary.--The term `business 
     intermediary' means an entity that brings together various 
     stakeholders with an expertise in an industry or business 
     sector.'';
       (6) in paragraph (9) (as redesignated by paragraph (1)), by 
     inserting ``, including a faith-based organization,'' after 
     ``nonprofit organization'';

[[Page 9556]]

       (7) in paragraph (10) (as redesignated by paragraph (1))--
       (A) in subparagraph (B), by striking ``and'' after the 
     semicolon;
       (B) in subparagraph (C)--
       (i) by striking ``for not less than 50 percent of the cost 
     of the training.'' and inserting ``for--
       ``(i) a significant portion of the cost of training as 
     determined by the local board, taking into account the size 
     of the employer and such other factors as the local board 
     determines to be appropriate; and
       ``(ii) in the case of customized training (as defined in 
     subparagraphs (A) and (B)) with an employer in multiple local 
     areas in the State, a significant portion of the cost of the 
     training, as determined by the Governor, taking into account 
     the size of the employer and such other factors as the 
     Governor determines to be appropriate.'';
       (8) in paragraph (11) (as redesignated by paragraph (1))--
       (A) in subparagraph (A)(ii)(II), by striking ``section 
     134(c)'' and inserting ``section 121(e)'';
       (B) in subparagraph (C), by striking ``or'' after the 
     semicolon;
       (C) in subparagraph (D), by striking the period and 
     inserting ``; or''; and
       (D) by adding at the end the following:
       ``(E)(i) is the spouse of a member of the Armed Forces on 
     active duty for a period of more than 30 days (as defined in 
     section 101(d)(2) of title 10, United States Code) who has 
     experienced a loss of employment as a direct result of 
     relocation to accommodate a permanent change in duty station 
     of such member; or
       ``(ii) is the spouse of a member of the Armed Forces on 
     active duty who meets the criteria described in paragraph 
     (12)(B).'';
       (9) in paragraph (12)(A) (as redesignated by paragraph 
     (1))--
       (A) by striking ``and'' after the semicolon and inserting 
     ``or'';
       (B) by striking ``(A)'' and inserting ``(A)(i)''; and
       (C) by adding at the end the following:
       ``(ii) is the dependent spouse of a member of the Armed 
     Forces on active duty for a period of more than 30 days (as 
     defined in section 101(d)(2) of title 10, United States Code) 
     whose family income is significantly reduced because of a 
     deployment (as defined in section 991(b) of title 10, United 
     States Code, or pursuant to paragraph (4) of such section), a 
     call or order to active duty pursuant to a provision of law 
     referred to in section 101(a)(13)(B) of title 10, United 
     States Code, a permanent change of station, or the service-
     connected (as defined in section 101(16) of title 38, United 
     States Code) death or disability of the member; and'';
       (10) in paragraph (14)(A) (as redesignated by paragraph 
     (1)), by striking ``section 122(e)(3)'' and inserting 
     ``section 122'';
       (11) by inserting after paragraph (18) (as redesignated by 
     paragraph (1)) the following:
       ``(19) Hard-to-serve populations.--The term `hard-to-serve 
     populations' means populations of individuals who are hard to 
     serve, including displaced homemakers, low-income 
     individuals, Native Americans, individuals with disabilities, 
     older individuals, ex-offenders, homeless individuals, 
     individuals with limited English proficiency, individuals who 
     do not meet the definition of literacy in section 203, 
     individuals facing substantial cultural barriers, migrant and 
     seasonal farmworkers, individuals within 2 years of 
     exhausting lifetime eligibility under part A of title IV of 
     the Social Security Act (42 U.S.C. 601 et seq.), single 
     parents (including single pregnant women), and such other 
     groups as the Governor determines to be hard to serve.'';
       (12) by inserting after paragraph (20) (as redesignated by 
     paragraph (1)) the following:
       ``(21) Integrated training program.--The term `integrated 
     training program' means a program that combines occupational 
     skills training with English language acquisition.
       ``(22) Institution of higher education.--The term 
     `institution of higher education' has the meaning given the 
     term in section 101(a), and subparagraphs (A) and (B) of 
     section 102(a)(1), of the Higher Education Act of 1965 (20 
     U.S.C. 1001(a), 1002(a)(1)).'';
       (13) in paragraph (30) (as redesignated by paragraph (1))--
       (A) by redesignating subparagraphs (D) through (F) as 
     subparagraphs (E) through (G), respectively; and
       (B) by inserting after subparagraph (C) the following:
       ``(D) receives or is eligible to receive a free or reduced 
     price lunch under the Richard B. Russell National School 
     Lunch Act (42 U.S.C. 1751 et seq.);'';
       (14) in paragraph (31) (as redesignated by paragraph (1)), 
     by inserting after ``fields of work'' the following: ``, 
     including occupations in computer science and technology and 
     other emerging high-skill occupations,'';
       (15) in paragraph (35) (as redesignated by paragraph (1)), 
     by inserting ``, subject to section 121(b)(1)(C)'' after 
     ``121(b)(1)'';
       (16) by striking paragraph (38) (as redesignated by 
     paragraph (1)) and inserting the following:
       ``(38) Out-of-school youth.--The term `out-of-school youth' 
     means an out-of-school youth as defined in section 
     129(a)(1)(B).'';
       (17) by inserting after paragraph (46) (as redesignated by 
     paragraph (1)) the following:
       ``(47) Self-sufficiency.--The term `self-sufficiency' means 
     self-sufficiency within the meaning of subsections 
     (a)(3)(A)(x) and (e)(1)(A)(xii) of section 134.'';
       (18) in paragraph (49) (as redesignated by paragraph (1)), 
     by striking ``clause (iii) or (v) of section 136(b)(3)(A)'' 
     and inserting ``section 136(b)(3)(A)(iii)'';
       (19) in paragraph (58) (as redesignated by paragraph (1)), 
     by striking ``(or as described in section 129(c)(5))'' and 
     inserting ``(or as described in section 129(a)(2))''; and
       (20) in paragraph (59) (as redesignated by paragraph (1)), 
     by striking ``established under section 117(h)'' and 
     inserting ``that may be established under section 
     117(h)(2)''.

      Subtitle B--Statewide and Local Workforce Investment Systems

     SEC. 111. PURPOSE.

       Section 106 (29 U.S.C. 2811) is amended to read as follows:

     ``SEC. 106. PURPOSES.

       ``The purposes of this subtitle are the following:
       ``(1)(A) Primarily, to provide workforce investment 
     activities, through statewide and local workforce investment 
     systems, that increase the employment, retention, self-
     sufficiency, and earnings of participants, and increase 
     occupational skill attainment by participants.
       ``(B) As a result of the provision of the activities, to 
     improve the quality of the workforce, reduce welfare 
     dependency, increase self-sufficiency, and enhance the 
     productivity and competitiveness of the Nation.
       ``(2) To enhance the workforce investment system of the 
     Nation by strengthening one-stop centers, providing for more 
     effective governance arrangements, promoting access to a more 
     comprehensive array of employment and training and related 
     services, establishing a targeted approach to serving youth, 
     improving performance accountability, and promoting State and 
     local flexibility.
       ``(3) To provide workforce investment activities in a 
     manner that promotes the informed choice of participants and 
     actively involves participants in decisions affecting their 
     participation in such activities.
       ``(4) To provide workforce investment systems that are 
     demand-driven and responsive to the needs of all employers, 
     including small employers.
       ``(5) To provide workforce investment systems that work in 
     all areas of the Nation, including urban and rural areas.
       ``(6) To allow flexibility to meet State, local, regional, 
     and individual workforce investment needs.
       ``(7) To recognize and reinforce the vital link between 
     economic development and workforce investment activities.
       ``(8) To provide for accurate data collection, reporting, 
     and performance measures that are not unduly burdensome.
       ``(9) To address the ongoing shortage of essential skills 
     in the United States workforce related to both manufacturing 
     and knowledge-based economies to ensure that the United 
     States remains competitive in the global economy.
       ``(10) To equip workers with higher skills and contribute 
     to lifelong education.
       ``(11) To eliminate training disincentives for hard-to-
     serve populations and minority workers, including effectively 
     utilizing community programs, services, and agencies.
       ``(12) To educate limited English proficient individuals 
     about skills and language so the individuals are employable.
       ``(13) To increase the employment, retention and earnings 
     of individuals with disabilities.''.

     SEC. 112. STATE WORKFORCE INVESTMENT BOARDS.

       (a) Membership.--
       (1) In general.--Section 111(b) (29 U.S.C. 2821(b)) is 
     amended--
       (A) in paragraph (1), by striking subparagraph (C) and 
     inserting the following:
       ``(C) representatives appointed by the Governor, who--
       ``(i) are the lead State agency officials with 
     responsibility for the programs and activities that are 
     described in section 121(b) and carried out by one-stop 
     partners, except that--

       ``(I) in any case in which no lead State agency official 
     has responsibility for such a program or activity, the 
     representative shall be a representative in the State with 
     expertise relating to such program or activity; and
       ``(II) in the case of the programs authorized under title I 
     of the Rehabilitation Act of 1973 (29 U.S.C. 720 et seq.), 
     the representative shall be the director of the designated 
     State unit, as defined in section 7 of the Rehabilitation Act 
     of 1973 (29 U.S.C. 705);

       ``(ii) are the State agency officials responsible for 
     economic development;
       ``(iii) are representatives of business in the State, 
     including small businesses, who--

       ``(I) are owners of businesses, chief executive or 
     operating officers of businesses, or other business 
     executives or employers with optimum policymaking or hiring 
     authority;
       ``(II) represent businesses with employment opportunities 
     that reflect employment opportunities in the State; and
       ``(III) are appointed from among individuals nominated by 
     State business organizations, business trade associations, 
     and local boards;

[[Page 9557]]

       ``(iv) are chief elected officials (representing cities and 
     counties, where appropriate);
       ``(v) are representatives of labor organizations, who have 
     been nominated by State labor federations; and
       ``(vi) are such other State agency officials and other 
     representatives as the Governor may designate.''; and
       (B) in paragraph (3), by striking ``paragraph (1)(C)(i)'' 
     and inserting ``paragraph (1)(C)(iii)''.
       (2) Conforming amendment.--Section 111(c) (29 U.S.C. 
     2821(c)) is amended by striking ``subsection (b)(1)(C)(i)'' 
     and inserting ``subsection (b)(1)(C)(iii)''.
       (b) Functions.--Section 111(d) (29 U.S.C. 2821(d)) is 
     amended--
       (1) in paragraph (1), by striking ``development'' and 
     inserting ``development, implementation, and revision'';
       (2) in paragraph (2)--
       (A) by striking ``section 134(c)'' and inserting ``section 
     121(e)''; and
       (B) in subparagraph (A), by inserting after ``section 
     121(b)'' the following: ``, including granting the authority 
     for the State employment service under the Wagner-Peyser Act 
     (29 U.S.C. 49 et seq.) to plan and coordinate employment and 
     training activities with local boards'';
       (3) by striking paragraph (3) and inserting the following:
       ``(3) reviewing and providing comment on the State plans of 
     all one-stop partner programs, where applicable, in order to 
     provide effective strategic leadership in the development of 
     a high quality, comprehensive statewide workforce investment 
     system, including commenting at least once annually on the 
     measures taken pursuant to section 113(b)(3) of the Carl D. 
     Perkins Vocational and Technical Education Act of 1998 (20 
     U.S.C. 2323(b)(3)) and title II of this Act;'';
       (4) by redesignating paragraphs (4) through (9) as 
     paragraphs (5) through (10), respectively;
       (5) by inserting after paragraph (3) the following:
       ``(4) development and review of statewide policies 
     affecting the coordinated provision of services through the 
     one-stop delivery system described in section 121(e) within 
     the State, including--
       ``(A) the development of objective criteria and procedures 
     for use by local boards in assessing the effectiveness and 
     continuous improvement of one-stop centers under section 
     121(g);
       ``(B) the development of guidance for the allocation of 
     one-stop center infrastructure funds under section 
     121(h)(1)(B);
       ``(C) the development of--
       ``(i) statewide policies relating to the appropriate roles 
     and contributions of one-stop partner programs within the 
     one-stop delivery system, including approaches to 
     facilitating equitable and efficient cost allocation in the 
     one-stop delivery system;
       ``(ii) statewide strategies for providing effective 
     outreach to individuals, including hard-to-serve populations, 
     and employers who could benefit from services provided 
     through the one-stop delivery system;
       ``(iii) strategies for technology improvements to 
     facilitate access to services provided through the one-stop 
     delivery system, in remote areas, and for individuals with 
     disabilities, which may be utilized throughout the State; and
       ``(iv) strategies for the effective coordination of 
     activities between the one-stop delivery system of the State 
     and the State employment service under the Wagner-Peyser Act 
     (29 U.S.C. 49 et seq.);
       ``(D) identification and dissemination of information on 
     best practices for effective operation of one-stop centers, 
     including use of innovative business outreach, partnerships, 
     and service delivery strategies, including for hard-to-serve 
     populations; and
       ``(E) conduct of such other matters as may promote 
     statewide objectives for, and enhance the performance of, the 
     one-stop delivery system;'';
       (6) in paragraph (5) (as redesignated by paragraph (4)), by 
     inserting ``and the development of statewide criteria to be 
     used by chief elected officials for the appointment of local 
     boards consistent with section 117'' after ``section 116'';
       (7) in paragraph (6) (as redesignated by paragraph (4)), by 
     striking ``sections 128(b)(3)(B) and 133(b)(3)(B)'' and 
     inserting ``sections 128(b)(3) and 133(b)(3)(B)'';
       (8) in paragraph (9) (as redesignated by paragraph (4))--
       (A) by striking ``employment statistics system'' and 
     inserting ``workforce and labor market information system''; 
     and
       (B) by striking ``and'' after the semicolon;
       (9) in paragraph (10) (as redesignated by paragraph (4))--
       (A) by inserting ``section 136(i) and'' before ``section 
     503''; and
       (B) by striking the period and inserting ``; and''; and
       (10) by adding at the end the following:
       ``(11) increasing the availability of skills training, 
     employment opportunities, and career advancement, for hard-
     to-serve populations.''.
       (c) Alternative Entity.--Section 111(e) (29 U.S.C. 2821(e)) 
     is amended--
       (1) in paragraph (1), by striking ``For'' and inserting 
     ``Subject to paragraph (3), for''; and
       (2) by adding at the end the following:
       ``(3) Failure to meet performance measures.--If a State 
     fails to have performed successfully, as defined in section 
     116(a)(2), the Secretary may require the State to establish a 
     State board in accordance with subsections (a), (b), and (c) 
     in lieu of the alternative entity established under paragraph 
     (1).''.
       (d) Conflict of Interest.--Section 111(f)(1) (29 U.S.C. 
     2821(f)(1)) is amended by inserting ``or participate in 
     action taken on'' after ``vote''.
       (e) Sunshine Provision.--Section 111(g) (29 U.S.C. 2821(g)) 
     is amended--
       (1) by inserting ``, and modifications to the State plan,'' 
     before ``prior''; and
       (2) by inserting ``, and modifications to the State plan'' 
     after ``the plan''.
       (f) Authority To Hire Staff.--Section 111 (29 U.S.C. 2821) 
     is amended by adding at the end the following:
       ``(h) Authority To Hire Staff.--
       ``(1) In general.--The State board may hire staff to assist 
     in carrying out the functions described in subsection (d) 
     using funds allocated under sections 127(b)(1)(C) and 132(b).
       ``(2) Limitation on rate.--Funds appropriated under this 
     title shall not be used to pay staff employed by the State 
     board, either as a direct cost or through any proration as an 
     indirect cost, at a rate in excess of the maximum rate 
     payable for a position at GS-15 of the General Schedule as in 
     effect on the date of enactment of the Workforce Investment 
     Act Amendments of 2005.''.

     SEC. 113. STATE PLAN.

       (a) Planning Cycle.--Section 112(a) (29 U.S.C. 2822(a)) is 
     amended--
       (1) by inserting ``, or a State unified plan as described 
     in section 501,'' before ``that outlines'';
       (2) by striking ``5-year strategy'' and inserting ``4-year 
     strategy''; and
       (3) by adding at the end the following: ``At the end of the 
     first 2-year period of the 4-year State plan, the State board 
     shall review and, as needed, amend the 4-year State plan to 
     reflect labor market and economic conditions. In addition, 
     the State shall submit a modification to the State plan at 
     the end of the first 2-year period of the State plan, which 
     may include redesignation of local areas pursuant to section 
     116(a) and specification of the levels of performance under 
     sections 136 for the third and fourth years of the plan.''.
       (b) Contents.--Section 112(b) (29 U.S.C. 2822(b)) is 
     amended--
       (1) in paragraph (8)(A)--
       (A) in clause (ix), by striking ``and'' after the 
     semicolon; and
       (B) by adding at the end the following:
       ``(xi) programs authorized under title II of the Social 
     Security Act (42 U.S.C. 401 et seq.) (relating to Federal 
     old-age, survivors, and disability insurance benefits), title 
     XVI of such Act (42 U.S.C. 1381 et seq.) (relating to 
     supplemental security income), title XIX of such Act (42 
     U.S.C. 1396 et seq.) (relating to medicaid), and title XX of 
     such Act (42 U.S.C. 1397 et seq.) (relating to block grants 
     to States for social services), programs authorized under 
     title VII of the Rehabilitation Act of 1973 (29 U.S.C. 796 et 
     seq.), and programs carried out by State agencies relating to 
     mental retardation and developmental disabilities; and'';
       (2) by striking paragraph (10) and inserting the following:
       ``(10) a description of how the State will use funds the 
     State received under this subtitle to leverage other Federal, 
     State, local, and private resources, in order to maximize the 
     effectiveness of such resources, expand resources for the 
     provision of education and training services, and expand the 
     participation of businesses, employees, and individuals in 
     the statewide workforce investment system, including a 
     description of incentives and technical assistance the State 
     will provide to local areas for such purposes;'';
       (3) in paragraph (12)(A), by striking ``sections 
     128(b)(3)(B) and 133(b)(3)(B)'' and inserting ``sections 
     128(b)(3) and 133(b)(3)(B)'';
       (4) in paragraph (14), by striking ``section 134(c)'' and 
     inserting ``section 121(e)'';
       (5) in paragraph (15), by striking ``section 116(a)(5)'' 
     and inserting ``section 116(a)(4)'';
       (6) in paragraph (17)--
       (A) in subparagraph (A)--
       (i) in clause (iii)--

       (I) by inserting ``local'' before ``customized training''; 
     and
       (II) by striking ``and'' at the end;

       (ii) in clause (iv), by striking ``(including displaced 
     homemakers),'' and all that follows through ``disabilities)'' 
     and inserting ``, hard-to-serve populations, and individuals 
     training for nontraditional employment''; and
       (iii) by adding after clause (iv) the following:
       ``(v) how the State will serve the employment and training 
     needs of individuals with disabilities, consistent with 
     section 188 and Executive Order 13217 (42 U.S.C. 12131 note; 
     relating to community-based alternatives for individuals with 
     disabilities), including the provision of outreach, intake, 
     the conduct of assessments, service delivery, the development 
     of adjustments to performance measures established under 
     section 136, and the training of staff; and''; and
       (B) in subparagraph (B), by striking ``and'' at the end;
       (7) in paragraph (18)(D)--
       (A) by striking ``youth opportunity grants under section 
     169'' and inserting ``youth

[[Page 9558]]

     challenge grants authorized under section 169 and other 
     federally funded youth programs''; and
       (B) by striking the period and inserting a semicolon; and
       (8) by adding at the end the following:
       ``(19) a description of how the State will utilize 
     technology to facilitate access to services in remote areas, 
     which may be utilized throughout the State;
       ``(20) a description of the State strategy for coordinating 
     workforce investment activities and economic development 
     activities, and promoting entrepreneurial skills training and 
     microenterprise services;
       ``(21) a description of the State strategy and assistance 
     to be provided for ensuring regional cooperation within the 
     State and across State borders as appropriate;
       ``(22) a description of how the State will use funds the 
     State receives under this subtitle to--
       ``(A) implement innovative programs and strategies designed 
     to meet the needs of all businesses in the State, including 
     small businesses, which may include incumbent worker training 
     programs, sectoral and industry cluster strategies, regional 
     skills alliances, career ladder programs, utilization of 
     effective business intermediaries, and other business 
     services and strategies that better engage employers in 
     workforce investment activities and make the statewide 
     workforce investment system more relevant to the needs of 
     State and local businesses, consistent with the objectives of 
     this title; and
       ``(B) provide incentives and technical assistance to assist 
     local areas in more fully engaging all employers, including 
     small employers, in local workforce investment activities, to 
     make the workforce investment system more relevant to the 
     needs of area businesses, and to better coordinate workforce 
     investment and economic development efforts to contribute to 
     the economic well-being of the local area, as determined 
     appropriate by the local board;
       ``(23) a description of the State strategy--
       ``(A) for ensuring cooperation between transportation 
     providers, including public transportation providers, and 
     providers of workforce investment activities; and
       ``(B) for ensuring coordination among appropriate State 
     agencies and programs to make available skills training, 
     employment services and opportunities, and career advancement 
     activities, that will assist ex-offenders in reentering the 
     workforce;
       ``(24) a description of how the State will assist local 
     areas in assuring physical and programmatic accessibility for 
     individuals with disabilities at one-stop centers;
       ``(25) a description of the process and methodology that 
     will be used by the State board to--
       ``(A) review statewide policies and provide guidance on the 
     coordinated provision of services through the one-stop 
     delivery system described in section 121(e);
       ``(B) establish, in consultation with chief elected 
     officials and local boards, objective criteria and procedures 
     for use by local boards in periodically assessing the 
     effectiveness, physical and programmatic accessibility, and 
     continuous improvement of one-stop centers and the one-stop 
     delivery system as described in section 121(g); and
       ``(C) determine--
       ``(i) one-stop partner program contributions for the costs 
     of the infrastructure of one-stop centers under section 
     121(h)(2); and
       ``(ii) the formula for allocating the funds described in 
     section 121(h)(2) to local areas;
       ``(26) a description of the State strategy for ensuring 
     that activities carried out under this title are placing men 
     and women in jobs, education, or training that lead to 
     comparable pay; and
       ``(27) a description of the technical assistance available 
     to one-stop operators and providers of training services for 
     strategies to serve hard-to-serve populations and promote 
     placement in nontraditional employment.''.
       (c) Modifications to Plan.--Section 112(d) (29 U.S.C. 
     2822(d)) is amended--
       (1) by striking ``5-year period'' and inserting ``4-year 
     period''; and
       (2) by adding at the end the following: ``In addition, the 
     State shall submit the modifications to the State plan 
     required under subsection (a), under circumstances prescribed 
     by the Secretary that are due to changes in Federal law that 
     significantly affect elements of the State plan.''.

     SEC. 114. LOCAL WORKFORCE INVESTMENT AREAS.

       (a) Designation of Areas.--
       (1) Considerations.--Section 116(a)(1) (29 U.S.C. 
     2831(a)(1)) is amended--
       (A) in subparagraph (A), by striking ``paragraphs (2), (3), 
     and (4)'' and inserting ``paragraphs (2) and (3)''; and
       (B) in subparagraph (B), by adding at the end the 
     following:
       ``(vi) The extent to which such local areas will promote 
     maximum effectiveness in the administration and provision of 
     services.''.
       (2) Automatic designation.--Section 116(a)(2) (29 U.S.C. 
     2831(a)(2)) is amended to read as follows:
       ``(2) Automatic designation.--
       ``(A) In general.--The Governor shall approve a request for 
     designation as a local area that is submitted prior to the 
     submission of the State plan, or of a modification to the 
     State plan relating to area designation, from any area that--
       ``(i) is a unit of general local government with a 
     population of 500,000 or more, except that after the initial 
     2-year period following such designation pursuant to this 
     clause that occurs after the date of enactment of the 
     Workforce Investment Act Amendments of 2005, the Governor 
     shall only be required to approve a request for designation 
     from such area if such area--

       ``(I) performed successfully; and
       ``(II) sustained fiscal integrity;

       ``(ii) was a local area under this title for the preceding 
     2-year period, if such local area--

       ``(I) performed successfully; and
       ``(II) sustained fiscal integrity;

       ``(iii) is served by a rural concentrated employment 
     program grant recipient, except that after the initial 2-year 
     period following any such designation under the initial State 
     plan submitted after the date of enactment of the Workforce 
     Investment Act Amendments of 2005, the Governor shall only be 
     required to approve a request for designation under this 
     clause for such area if such area--

       ``(I) performed successfully; and
       ``(II) sustained fiscal integrity; or

       ``(iv) was a local area under section 116(a)(2)(C) (as in 
     effect on the day before the date of enactment of the 
     Workforce Investment Act Amendments of 2005), except that 
     after the initial 2-year period following such designation 
     pursuant to this clause that occurs after that date of 
     enactment, the Governor shall only be required to approve a 
     request for designation under this clause for such area if 
     such area--

       ``(I) performed successfully; and
       ``(II) sustained fiscal integrity.

       ``(B) Definitions.--For purposes of this paragraph:
       ``(i) Performed successfully.--The term `performed 
     successfully', when used with respect to a local area, means 
     the local area performed at 80 percent or more of the 
     adjusted level of performance for core indicators of 
     performance described in section 136(b)(2)(A) for 2 
     consecutive years.
       ``(ii) Sustained fiscal integrity.--The term `sustained 
     fiscal integrity', used with respect to an area, means that 
     the Secretary has not made a formal determination during the 
     preceding 2-year period that either the grant recipient or 
     the administrative entity of the area misexpended funds 
     provided under this title due to willful disregard of the 
     requirements of the Act involved, gross negligence, or 
     failure to comply with accepted standards of 
     administration.''.
       (3) Conforming amendments.--Section 116(a) (29 U.S.C. 
     2831(a)) is amended--
       (A) by striking paragraph (3);
       (B) by redesignating paragraphs (4) and (5) as paragraph 
     (3) and (4), respectively;
       (C) in paragraph (3) (as redesignated by subparagraph 
     (B))--
       (i) by striking ``(including temporary designation)''; and
       (ii) by striking ``(v)'' and inserting ``(vi)''; and
       (D) in paragraph (4) (as redesignated by subparagraph 
     (B))--
       (i) by striking ``under paragraph (2) or (3)'' and 
     inserting ``under paragraph (2)''; and
       (ii) by striking the second sentence.
       (b) Single Local Area States.--Section 116(b) (29 U.S.C. 
     2831(b)) is amended to read as follows:
       ``(b) Single Local Area States.--
       ``(1) Continuation of previous designation.--
     Notwithstanding subsection (a)(2), the Governor of any State 
     that was a single local area for purposes of this title as of 
     July 1, 2004, may continue to designate the State as a single 
     local area for purposes of this title if the Governor 
     identifies the State as a local area in the State plan under 
     section 112(b)(5).
       ``(2) Redesignation.--The Governor of a State not described 
     in paragraph (1) may designate the State as a single local 
     area if, prior to the submission of the State plan or 
     modification to such plan so designating the State, no local 
     area meeting the requirements for automatic designation under 
     subsection (a)(2) requests such designation as a separate 
     local area.
       ``(3) Effect on local plan.--In any case in which a State 
     is designated as a local area pursuant to this subsection, 
     the local plan prepared under section 118 for the area shall 
     be submitted to the Secretary for approval as part of the 
     State plan under section 112.''.
       (c) Regional Planning.--Section 116(c) (29 U.S.C. 2831(c)) 
     is amended--
       (1) by striking paragraph (1) and inserting the following:
       ``(1) Planning.--
       ``(A) In general.--As part of the process for developing 
     the State plan, a State may require regional planning by 
     local boards for a designated region in the State. The State 
     may require the local boards for a designated region to 
     participate in a regional planning process that results in 
     the establishment of regional performance measures for 
     workforce investment activities authorized under this 
     subtitle. The State, after consultation with local boards and 
     chief elected officials, may require the local boards for the 
     designated region to prepare, submit, and obtain approval of 
     a single regional plan that incorporates local plans for each 
     of the local areas in the region, as required under section 
     118. The State may award regional incentive grants to the 
     designated regions that meet or exceed the regional 
     performance measures pursuant to section 134(a)(2)(B)(iii).

[[Page 9559]]

       ``(B) Technical assistance.--If the State requires regional 
     planning as provided in subparagraph (A), the State shall 
     provide technical assistance and labor market information to 
     such local areas in the designated regions to assist with 
     such regional planning and subsequent service delivery 
     efforts.'';
       (2) in paragraph (2), by inserting ``information about the 
     skill requirements of existing and emerging industries and 
     industry clusters,'' after ``information about employment 
     opportunities and trends,''; and
       (3) in paragraph (3), by adding at the end the following: 
     ``Such services may be required to be coordinated with 
     regional economic development services and strategies.''.

     SEC. 115. LOCAL WORKFORCE INVESTMENT BOARDS.

       (a) Composition.--Section 117(b) (29 U.S.C. 2832(b)) is 
     amended--
       (1) in paragraph (2)(A)--
       (A) in clause (i), by striking subclause (II) and inserting 
     the following:

       ``(II) collectively, represent businesses with employment 
     opportunities that reflect the employment opportunities of 
     the local area, and include representatives of businesses 
     that are in high-growth and emerging industries, and 
     representatives of businesses, including small businesses, in 
     the local area; and'';

       (B) by striking clause (ii) and inserting the following:
       ``(ii)(I) a superintendent representing the local school 
     districts involved or another high-level official from such 
     districts;
       ``(II) the president or highest ranking official of an 
     institution of higher education participating in the 
     workforce investment activities in the local area; and
       ``(III) an administrator of local entities providing adult 
     education and literacy activities in the local area;'';
       (C) in clause (iv), by inserting ``, hard-to-serve 
     populations,'' after ``disabilities'';
       (D) in clause (v), by striking ``and'' at the end; and
       (E) by striking clause (vi) and inserting the following:
       ``(vi) a representative from the State employment service 
     under the Wagner-Peyser Act (29 U.S.C. 49 et seq.) who is 
     serving the local area; and
       ``(vii) if the local board does not establish or continue a 
     youth council, representatives with experience serving out-
     of-school youth, particularly out-of-school youth facing 
     barriers to employment; and''; and
       (2) by adding at the end the following:
       ``(6) Special rule.--In the case that there are multiple 
     school districts or institutions of higher education serving 
     a local area, the representatives described in subclause (I) 
     or (II) of paragraph (2)(A)(ii), respectively, shall be 
     appointed from among individuals nominated by regional or 
     local educational agencies, institutions, or organizations 
     representing such agencies or institutions.''.
       (b) Authority of Board Members.--Section 117(b)(3) (29 
     U.S.C. 2832(b)(3)) is amended--
       (1) in the heading, by inserting ``and representation'' 
     after ``Authority''; and
       (2) by adding at the end the following: ``The members of 
     the board shall represent diverse geographic sections within 
     the local area.''.
       (c) Conforming Amendment.--Section 117(c)(1)(C) (29 U.S.C. 
     2832(c)(1)(C)) is amended by striking ``section 
     116(a)(2)(B)'' and inserting ``section 116(a)(2)(A)(ii)''.
       (d) Functions.--Section 117(d) (29 U.S.C. 2832(d)) is 
     amended--
       (1) in paragraph (2)--
       (A) in subparagraph (B)--
       (i) by inserting ``(except as provided in section 123(b))'' 
     after ``basis''; and
       (ii) by inserting ``(where appropriate)'' after ``youth 
     council''; and
       (B) by adding at the end the following:
       ``(E) Consumer choice requirements.--Consistent with 
     sections 122 and paragraphs (3) and (4) of 134(d), the local 
     board shall work to ensure there are sufficient providers of 
     intensive services and training services serving the local 
     area in a manner that maximizes consumer choice, including 
     providers with expertise in assisting individuals with 
     disabilities.'';
       (2) in paragraph (3)(B), by striking clause (ii) and 
     inserting the following:
       ``(ii) Staff.--

       ``(I) In general.--The local board may hire staff.
       ``(II) Limitation on rate.--Funds appropriated under this 
     title shall not be used to pay staff employed by the local 
     board, either as a direct cost or through any proration as an 
     indirect cost, at a rate in excess of the maximum rate 
     payable for a position at GS-15 of the General Schedule, as 
     in effect on the date of enactment of the Workforce 
     Investment Act Amendments of 2005.'';

       (3) in paragraph (4), by inserting ``, and shall ensure the 
     appropriate use and management of the funds provided under 
     this subtitle for such programs, activities, and system'' 
     after ``area'';
       (4) in paragraph (6)--
       (A) by striking ``Employment statistics system'' and 
     inserting ``Workforce and labor market information system''; 
     and
       (B) by striking ``employment statistics system'' and 
     inserting ``workforce and labor market information system'';
       (5) in paragraph (8)--
       (A) by inserting ``, including small employers,'' after 
     ``private sector employers''; and
       (B) by striking the period and inserting ``, taking into 
     account the unique needs of small businesses.''; and
       (6) by adding at the end the following:
       ``(9) Technology improvements.--The local board shall 
     develop strategies for technology improvements to facilitate 
     access to services, in remote areas, for services authorized 
     under this subtitle and carried out in the local area.''.
       (e) Conforming Amendment.--Section 117(f)(2) (29 U.S.C. 
     2832(f)(2)) is amended by striking ``described in section 
     134(c)''.
       (f) Conflict of Interest.--Section 117(g)(1) (29 U.S.C. 
     2832(g)(1)) is amended by inserting ``or participate in 
     action taken on'' after ``vote.''
       (g) Authority To Establish Councils and Elimination of 
     Requirement for Youth Councils.--Section 117(h) (29 U.S.C. 
     2832(h)) is amended to read as follows:
       ``(h) Councils.--The local board may establish or continue 
     councils to provide information and advice to assist the 
     local board in carrying out activities under this title. Such 
     councils may include--
       ``(1) a council composed of one-stop partners to advise the 
     local board on the operation of the one-stop delivery system 
     involved;
       ``(2) a youth council composed of experts and stakeholders 
     in youth programs to advise the local board on youth 
     activities; and
       ``(3) such other councils as the local board determines are 
     appropriate.''.
       (h) Alternative Entity Provision.--Section 117(i)(1) (29 
     U.S.C. 2832(i)(1)) is amended--
       (1) in the matter preceding subparagraph (A), by striking 
     ``and paragraphs (1) and (2) of subsection (h),'';
       (2) by striking subparagraph (B) and inserting the 
     following:
       ``(B) was in existence on August 7, 1998, pursuant to State 
     law; and'';
       (3) by striking subparagraph (C); and
       (4) by redesignating subparagraph (D) as subparagraph (C).

     SEC. 116. LOCAL PLAN.

       (a) Planning Cycle.--Section 118(a) (29 U.S.C. 2833(a)) is 
     amended--
       (1) by striking ``5-year'' and inserting ``4-year''; and
       (2) by adding at the end the following: ``At the end of the 
     first 2-year period of the 4-year plan, the local board shall 
     review and, as needed, amend the 4-year plan to reflect labor 
     market and economic conditions.''.
       (b) Contents.--Section 118(b) (29 U.S.C. 2833(b)) is 
     amended--
       (1) in paragraph (2)--
       (A) in subparagraph (A), by striking ``and'' after the 
     semicolon;
       (B) by striking subparagraph (B) and inserting the 
     following:
       ``(B) a description of how the local board will facilitate 
     access to services provided through the one-stop delivery 
     system involved, in remote areas, including facilitating 
     access through the use of technology; and''; and
       (C) by adding at the end the following:
       ``(C) a description of how the local board will ensure 
     physical and programmatic accessibility for individuals with 
     disabilities at one-stop centers;'';
       (2) in paragraph (9), by striking ``; and'' and inserting a 
     semicolon;
       (3) by redesignating paragraph (10) as paragraph (16); and
       (4) by inserting after paragraph (9) the following:
       ``(10) a description of how the local board will coordinate 
     workforce investment activities carried out in the local area 
     with economic development activities carried out in the local 
     area, and promote entrepreneurial skills training and 
     microenterprise services;
       ``(11) a description of the strategies and services that 
     will be initiated in the local area to more fully engage all 
     employers, including small employers, in workforce investment 
     activities, to make the workforce investment system more 
     relevant to the needs of area businesses, and to better 
     coordinate workforce investment and economic development 
     efforts, which may include the implementation of innovative 
     initiatives such as incumbent worker training programs, 
     sectoral and industry cluster strategies, regional skills 
     alliance initiatives, career ladder programs, utilization of 
     effective business intermediaries, and other business 
     services and strategies designed to meet the needs of area 
     employers and contribute to the economic well-being of the 
     local area, as determined appropriate by the local board, 
     consistent with the objectives of this title;
       ``(12) a description of how the local board will expand 
     access to education and training services for eligible 
     individuals who are in need of such services through--
       ``(A) the utilization of programs funded under this title; 
     and
       ``(B) the increased leveraging of resources other than 
     those provided under this title, including tax credits, 
     private sector-provided training, and other Federal, State, 
     local, and private funds that are brokered through the one-
     stop centers for training services;
       ``(13) a description of how the local board will coordinate 
     workforce investment activities carried out in the local area 
     with the provision of transportation, including public 
     transportation, in the local area;

[[Page 9560]]

       ``(14) a description of plans for, assurances concerning, 
     and strategies for maximizing coordination of services 
     provided by the State employment service under the Wagner-
     Peyser Act (29 U.S.C. 49 et seq.) and services provided in 
     the local area through the one-stop delivery system described 
     in section 121(e), to improve service delivery and avoid 
     duplication of services;
       ``(15) a description of how the local board will coordinate 
     workforce investment activities carried out in the local area 
     with other Federal, State, and local area education, job 
     training, and economic development programs and activities; 
     and''.

     SEC. 117. ESTABLISHMENT OF ONE-STOP DELIVERY SYSTEMS.

       (a) One-Stop Partners.--
       (1) Required partners.--Section 121(b)(1) (29 U.S.C. 
     2841(b)(1)) is amended--
       (A) by striking subparagraph (A) and inserting the 
     following:
       ``(A) Roles and responsibilities of one-stop partners.--
     Each entity that carries out a program or activities 
     described in subparagraph (B) shall--
       ``(i) provide access through the one-stop delivery system 
     to the programs and activities carried out by the entity, 
     including making the core services described in section 
     134(d)(2) that are applicable to the program of the entity 
     available at the one-stop centers (in addition to any other 
     appropriate locations);
       ``(ii) use a portion of the funds available to the program 
     of the entity to maintain the one-stop delivery system, 
     including payment of the infrastructure costs of one-stop 
     centers in accordance with subsection (h);
       ``(iii) enter into a local memorandum of understanding with 
     the local board relating to the operation of the one-stop 
     system that meets the requirements of subsection (c);
       ``(iv) participate in the operation of the one-stop system 
     consistent with the terms of the memorandum of understanding, 
     the requirements of this title, and the requirements of the 
     Federal laws authorizing the programs carried out by the 
     entity; and
       ``(v) provide representation on the State board to the 
     extent provided under section 111.'';
       (B) in subparagraph (B)--
       (i) by striking clause (v);
       (ii) by redesignating clauses (vi) through (xii) as clauses 
     (v) through (xi), respectively;
       (iii) in clause (x) (as redesignated by clause (ii)), by 
     striking ``and'' at the end;
       (iv) in clause (xi) (as redesignated by clause (ii)), by 
     striking the period and inserting ``; and''; and
       (v) by adding at the end the following:
       ``(xii) programs authorized under part A of title IV of the 
     Social Security Act (42 U.S.C. 601 et seq.), subject to 
     subparagraph (C).''; and
       (C) by adding at the end the following:
       ``(C) Determination by the governor.--
       ``(i) In general.--An entity that carries out programs 
     referred to in subparagraph (B)(xii) shall be included in the 
     one-stop partners for the local area, as a required partner, 
     for purposes of this title unless the Governor of the State 
     provides the notification described in clause (ii).
       ``(ii) Notification.--The notification referred to in 
     clause (i) is a notification that--

       ``(I) is made in writing of a determination by the Governor 
     not to include such entity in the one-stop partners described 
     in clause (i); and
       ``(II) is provided to the Secretary and the Secretary of 
     Health and Human Services.''.

       (2) Additional partners.--
       (A) In general.--Section 121(b)(2)(A) (29 U.S.C. 
     2841(b)(2)(A)) is amended to read as follows:
       ``(A) In general.--With the approval of the local board and 
     chief elected official, in addition to the entities described 
     in paragraph (1), other entities that carry out human 
     resource programs described in subparagraph (B) may be one-
     stop partners and carry out the responsibilities described in 
     paragraph (1)(A).''.
       (B) Additional partners.--Section 121(b)(2)(B) (29 U.S.C. 
     2841(b)(2)(B)) is amended by striking clauses (i) through 
     (iii) and inserting the following:
       ``(i) employment and training programs administered by the 
     Social Security Administration, including the Ticket to Work 
     and Self-Sufficiency program established under section 1148 
     of the Social Security Act (42 U.S.C. 1320b-19);
       ``(ii) employment and training programs carried out by the 
     Small Business Administration;
       ``(iii) programs authorized under section 6(d)(4) of the 
     Food Stamp Act of 1977 (7 U.S.C. 2015(d)(4));''.
       (b) Local Memorandum of Understanding.--Section 
     121(c)(2)(A) (29 U.S.C. 2841(c)(2)(A)) is amended to read as 
     follows:
       ``(A) provisions describing--
       ``(i) the services to be provided through the one-stop 
     delivery system consistent with the requirements of this 
     section, including the manner in which the services will be 
     coordinated through such system;
       ``(ii) how the costs of such services and the operating 
     costs of such system will be funded, through cash and in-kind 
     contributions, to provide a stable and equitable funding 
     stream for ongoing one-stop system operations, including the 
     funding of the infrastructure costs of one-stop centers in 
     accordance with subsection (h);
       ``(iii) methods of referral of individuals between the one-
     stop operator and the one-stop partners for appropriate 
     services and activities;
       ``(iv) methods to ensure the needs of hard-to-serve 
     populations are addressed in providing access to services 
     through the one-stop system; and
       ``(v) the duration of the memorandum of understanding and 
     the procedures for amending the memorandum during the term of 
     the memorandum, and assurances that such memorandum shall be 
     reviewed not less than once every 2-year period to ensure 
     appropriate funding and delivery of services; and''.
       (c) Conforming Amendment.--Section 121(d)(2) (29 U.S.C. 
     2841(d)(2)) is amended by striking ``section 134(c)'' and 
     inserting ``section 121(e)''.
       (d) Provision of Services.--
       (1) Elimination of provisions concerning established 
     systems.--Section 121 (29 U.S.C. 2841) is amended by striking 
     subsection (e).
       (2) Redesignation.--Subtitle B of title I is amended--
       (A) in section 134 (29 U.S.C. 2864), by redesignating 
     subsection (c) as subsection (e); and
       (B) by transferring that subsection (e) so that the 
     subsection appears after subsection (d) of section 121.
       (3) One-stop delivery systems.--Paragraph (1) of section 
     121(e) (29 U.S.C. 2841(e)) (as redesignated by paragraph (2)) 
     is amended--
       (A) in subparagraph (A), by striking ``subsection (d)(2)'' 
     and inserting ``section 134(d)(2)'';
       (B) in subparagraph (B)--
       (i) by striking ``subsection (d)'' and inserting ``section 
     134(d)'';
       (ii) by striking ``individual training accounts'' and 
     inserting ``career scholarship accounts''; and
       (iii) by striking ``subsection (d)(4)(G)'' and inserting 
     ``section 134(d)(4)(G)'';
       (C) in subparagraph (C), by striking ``subsection (e)'' and 
     inserting ``section 134(e)'';
       (D) in subparagraph (D), by striking ``section 121(b)'' and 
     inserting ``subsection (b)''; and
       (E) in subparagraph (E), by striking ``information 
     described in section 15'' and inserting ``data, information, 
     and analysis described in section 15(a)''.
       (e) Continuous Improvement of One-Stop Centers.--Section 
     121 (29 U.S.C. 2841) is amended by adding at the end the 
     following:
       ``(g) Continuous Improvement of One-Stop Centers.--
       ``(1) In general.--The State board, in consultation with 
     chief local elected officials and local boards, shall 
     establish objective criteria and procedures for use by local 
     boards in periodically assessing the effectiveness, physical 
     and programmatic accessibility, and continuous improvement of 
     one-stop centers and the one-stop delivery system.
       ``(2) Criteria.--The procedures and criteria developed 
     under this subsection shall include minimum standards 
     relating to the scope and degree of service coordination 
     achieved by the one-stop delivery system with respect to the 
     programs administered by the one-stop partners at the one-
     stop centers, consistent with the guidelines and guidance 
     provided by the Governor and by the State board, in 
     consultation with the chief elected official and local 
     boards, for such partners' participation under subsections 
     (h)(1)(B) and subsection (i), respectively, and such other 
     factors relating to the quality, accessibility, and 
     effectiveness of the one-stop delivery system as the State 
     board determines to be appropriate.
       ``(3) Local boards.--Consistent with the criteria developed 
     by the State, the local board may develop additional criteria 
     of higher standards to respond to local labor market and 
     demographic conditions and trends.
       ``(h) Funding of One-Stop Infrastructure.--
       ``(1) In general.--
       ``(A) Options for infrastructure funding.--
       ``(i) Local options.--The local board, chief elected 
     officials, and one-stop partners in a local area may choose 
     to fund the costs of the infrastructure of one-stop centers 
     through--

       ``(I) methods described in the local memorandum of 
     understanding, if, the local board, chief elected officials, 
     and one-stop partners agree to such methods; or
       ``(II) the State infrastructure funding mechanism described 
     in paragraph (2).

       ``(ii) Failure to reach agreement on funding methods.--If, 
     as of July 1, 2006, the local board, chief elected officials, 
     and one-stop partners in a local area fail to reach agreement 
     on methods of sufficient funding of the infrastructure costs 
     of one-stop centers, as determined by the local area, the 
     State infrastructure funding mechanism described in paragraph 
     (2) shall be applicable to such local area.
       ``(B) Guidance for infrastructure funding.--In addition to 
     carrying out the requirements relating to the State mechanism 
     for one-stop center infrastructure funding described in 
     paragraph (2), the Governor, after consultation with chief 
     local elected officials, local boards, and the State board, 
     and

[[Page 9561]]

     consistent with the guidelines provided by the State board 
     under subsection (i), shall provide--
       ``(i) guidelines for State administered one-stop partner 
     programs in determining such programs' contributions to and 
     participation in the one-stop delivery system, including 
     funding for the costs of infrastructure as defined in 
     paragraph (2)(D), negotiated pursuant to the local memorandum 
     of understanding under subsection (c); and
       ``(ii) guidance to assist local areas in identifying 
     equitable and stable alternative methods of funding of the 
     costs of the infrastructure of one-stop centers in local 
     areas.
       ``(2) State one-stop infrastructure funding.--
       ``(A) Partner contributions.--
       ``(i) In general.--Subject to clause (iii), a portion 
     determined under clause (ii) of the Federal funds provided to 
     the State and areas within the State under the Federal laws 
     authorizing the programs described in subsection (b)(1) and 
     administered by one-stop partners for a fiscal year shall be 
     provided to the Governor from such programs to assist in 
     paying the costs of infrastructure of one-stop centers in 
     those local areas of the State not funded under the option 
     described in paragraph (1)(A)(i)(I).
       ``(ii) Determination of governor.--

       ``(I) In general.--Subject to subclause (II) and clause 
     (iii), the Governor, after consultation with chief local 
     elected officials, local boards, and the State board, shall 
     determine the portion of funds to be provided under clause 
     (i) by each one-stop partner from each program described in 
     clause (i). In making such determination, the Governor shall 
     calculate the proportionate use of the one-stop centers for 
     the purpose of determining funding contributions pursuant to 
     clause (i)(II) or (ii) of paragraph (1)(A) by each partner, 
     and the costs of administration for purposes not related to 
     one-stop centers for each partner. The Governor shall exclude 
     from such determination the portion of funds and use of one-
     stop centers attributable to the programs of one-stop 
     partners for those local areas of the State where the 
     infrastructure of one-stop centers is funded under the option 
     described in paragraph (1)(A)(i)(I).
       ``(II) Special rule.--In a State in which the State 
     constitution places policymaking authority that is 
     independent of the authority of the Governor in an entity or 
     official with respect to the funds provided for adult 
     education and literacy activities authorized under title II 
     and for postsecondary vocational and technical education 
     activities authorized under the Carl D. Perkins Vocational 
     and Technical Education Act of 1998 (20 U.S.C. 2301 et seq.), 
     or vocational rehabilitation services offered under the 
     Rehabilitation Act of 1973 (29 U.S.C. 701 et seq.), the 
     determination described in subclause (I) with respect to the 
     programs authorized under that title and those Acts shall be 
     made by the chief officer of the entity with such authority 
     in consultation with the Governor.
       ``(III) Appeal by one-stop partners.--The Governor shall 
     establish a procedure for the one-stop partner administering 
     a program described in subsection (b) to appeal a 
     determination regarding the portion of funds to be 
     contributed under this paragraph on the basis that such 
     determination is inconsistent with the criteria described in 
     the State plan or with the requirements of this paragraph. 
     Such procedure shall ensure prompt resolution of the appeal.

       ``(iii) Limitations.--

       ``(I) Provision from administrative funds.--The funds 
     provided under this paragraph by each one-stop partner shall 
     be provided only from funds available for the costs of 
     administration under the program administered by such 
     partner, and shall be subject to the program limitations with 
     respect to the portion of funds under such program that may 
     be used for administration.
       ``(II) Cap on required contributions.--

       ``(aa) WIA formula programs and employment service.--The 
     portion of funds required to be contributed under clause 
     (i)(II) or (ii) of paragraph (1)(A) by the programs 
     authorized under chapters 4 and 5 and under the Wagner-Peyser 
     Act (29 U.S.C. 49 et seq.) shall not be in excess of 3 
     percent of the amount of Federal funds provided to carry out 
     each such program in the State for a fiscal year.
       ``(bb) Other one-stop partners.--The portion of funds 
     required to be contributed under clause (i)(II) or (ii) of 
     paragraph (1)(A) by a one-stop partner from a program 
     described in subsection (b)(1) other than the programs 
     described under item (aa) shall not be in excess of 1\1/2\ 
     percent of the amount of Federal funds provided to carry out 
     such program in the State for a fiscal year.
       ``(cc) Special rule.--Notwithstanding items (aa) and (bb), 
     an agreement, including a local memorandum of understanding, 
     entered into prior to the date of enactment of the Workforce 
     Investment Act Amendments of 2005 by an entity regarding 
     contributions under this title that permits the percentages 
     described in such items to be exceeded, may continue to be in 
     effect until terminated by the parties.
       ``(dd) Vocational rehabilitation.--Notwithstanding items 
     (aa) and (bb), an entity administering a program under title 
     I of the Rehabilitation Act of 1973 (29 U.S.C. 720 et seq.) 
     shall not be required to provide, for the purposes of this 
     paragraph, an amount in excess of--

       ``(AA) 0.75 percent of the amount provided for such program 
     in the State for the second program year that begins after 
     the date of enactment of the Workforce Investment Act 
     Amendments of 2005;
       ``(BB) 1.0 percent of the amount provided for such program 
     in the State for the third program year that begins after 
     such date;
       ``(CC) 1.25 percent of the amount provided for such program 
     in the State for the fourth program year that begins after 
     such date; and
       ``(DD) 1.5 percent of the amount provided for such program 
     in the State for the fifth and each succeeding program year 
     that begins after such date.
       ``(III) Federal direct spending programs.--An entity 
     administering a program funded with direct spending as 
     defined in section 250(c)(8) of the Balanced Budget and 
     Emergency Deficit Control Act of 1985 (2 U.S.C. 900(c)(8)) 
     shall not be required to provide, for purposes of this 
     paragraph, an amount in excess of the amount determined to be 
     equivalent to the cost of the proportionate use of the one-
     stop centers for such program in the State.
       ``(IV) Native american programs.--Native American programs 
     established under section 166 shall not be subject to the 
     provisions of this subsection or subsection (i). The method 
     for determining the appropriate portion of funds to be 
     provided by such Native American programs to pay for the 
     costs of infrastructure of a one-stop center shall be 
     determined as part of the development of the memorandum of 
     understanding under subsection (c) for the one-stop center 
     and shall be stated in the memorandum.

       ``(B) Allocation by governor.--From the funds provided 
     under subparagraph (A), the Governor shall allocate the funds 
     to local areas in accordance with the formula established 
     under subparagraph (C) for the purposes of assisting in 
     paying the costs of infrastructure of one-stop centers.
       ``(C) Allocation formula.--The State board shall develop a 
     formula to be used by the Governor to allocate the funds 
     provided under subparagraph (A) to local areas not funding 
     infrastructure costs under the option described in paragraph 
     (1)(A)(i)(I). The formula shall be based on factors including 
     the number of one-stop centers in a local area, the 
     population served by such centers, the services provided by 
     such centers, and other factors relating to the performance 
     of such centers that the State board determines are 
     appropriate.
       ``(D) Costs of infrastructure.--In this subsection, the 
     term `costs of infrastructure', used with respect to a one-
     stop center, means the nonpersonnel costs that are necessary 
     for the general operation of the one-stop center, including 
     the rental costs of the facilities, the costs of utilities 
     and maintenance, equipment (including assessment-related 
     products and adaptive technology for individuals with 
     disabilities), and technology to facilitate remote access to 
     the one-stop center's strategic planning activities, and 
     common outreach activities.
       ``(i) Other Funds.--
       ``(1) In general.--Subject to the memorandum of 
     understanding described in subsection (c) for the one-stop 
     delivery system involved, in addition to the funds provided 
     to carry out subsection (h), a portion of funds made 
     available under Federal law authorizing the programs 
     described in subsection (b) and administered by one-stop 
     partners, or the noncash resources available under such 
     programs, shall be used to pay the additional costs relating 
     to the operation of the one-stop delivery system that are not 
     paid from the funds provided under subsection (h), as 
     determined in accordance with paragraph (2), to the extent 
     not inconsistent with the Federal law involved. Such costs 
     shall include the costs of the provision of core services 
     described in section 134(d)(2) applicable to each program and 
     may include common costs that are not paid from the funds 
     provided under subsection (h).
       ``(2) Determination and guidance.--The method for 
     determining the appropriate portion of funds and noncash 
     resources to be provided by each program under paragraph (1) 
     for a one-stop center shall be determined as part of the 
     development of the memorandum of understanding under 
     subsection (c) for the one-stop center and shall be stated in 
     the memorandum. The State board shall provide guidance to 
     facilitate the determination of an appropriate allocation of 
     the funds and noncash resources in local areas.''.

     SEC. 118. ELIGIBLE PROVIDERS OF TRAINING SERVICES.

       Section 122 (29 U.S.C. 2842) is amended to read as follows:

     ``SEC. 122. IDENTIFICATION OF ELIGIBLE PROVIDERS OF TRAINING 
                   SERVICES.

       ``(a) Eligibility.--
       ``(1) In general.--The Governor, after consultation with 
     the State board, shall establish criteria and procedures 
     regarding the eligibility of providers of training services 
     described in section 134(d)(4) (referred to in this section 
     as `training services') to receive funds provided under 
     section 133(b) for the provision of training services.
       ``(2) Providers.--Subject to the provisions of this 
     section, to be eligible to receive the funds provided under 
     section 133(b) for the provision of training services, the 
     provider shall be--

[[Page 9562]]

       ``(A) a postsecondary educational institution that--
       ``(i) is eligible to receive Federal funds under title IV 
     of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.); 
     and
       ``(ii) provides a program that leads to an associate 
     degree, baccalaureate degree, or industry-recognized 
     certification;
       ``(B) an entity that carries out programs under the Act of 
     August 16, 1937 (commonly known as the `National 
     Apprenticeship Act'; 50 Stat. 664, chapter 663; 29 U.S.C. 50 
     et seq.); or
       ``(C) another public or private provider of a program of 
     training services.
       ``(3) Inclusion in list of eligible providers.--A provider 
     described in subparagraph (A) or (C) of paragraph (2) shall 
     comply with the criteria and procedures established under 
     this section to be included on the list of eligible providers 
     of training services described in subsection (d)(1). A 
     provider described in paragraph (2)(B) shall be included on 
     the list of eligible providers of training services described 
     in subsection (d)(1) for so long as the provider remains 
     certified by the Department of Labor to carry out the 
     programs described in paragraph (2)(B).
       ``(b) Criteria.--
       ``(1) In general.--The criteria established by the Governor 
     pursuant to subsection (a) shall take into account--
       ``(A) the performance of providers of training services 
     with respect to the performance measures and other matters 
     for which information is required under paragraph (2) and 
     other appropriate measures of performance outcomes for those 
     participants receiving training services under this subtitle 
     (taking into consideration the characteristics of the 
     population served and relevant economic conditions);
       ``(B) the need to ensure access to training services 
     throughout the State, including any rural areas;
       ``(C) the information such providers are required to report 
     to State agencies with respect to Federal and State programs 
     (other than the program carried out under this subtitle), 
     including one-stop partner programs;
       ``(D) the requirements for State licensing of providers of 
     training services, and the licensing status of each provider 
     of training services if applicable;
       ``(E) to the extent practicable, encouraging the use of 
     industry-recognized standards and certification;
       ``(F) the ability of the providers to offer programs that 
     lead to a degree or an industry-recognized certification;
       ``(G) the ability to provide training services to hard-to-
     serve populations, including individuals with disabilities; 
     and
       ``(H) such other factors as the Governor determines are 
     appropriate to ensure--
       ``(i) the quality of services provided;
       ``(ii) the accountability of the providers;
       ``(iii) that the one-stop centers in the State will ensure 
     that such providers meet the needs of local employers and 
     participants;
       ``(iv) the informed choice of participants under chapter 5; 
     and
       ``(v) that the collection of information required is not 
     unduly burdensome or costly to providers.
       ``(2) Information.--The criteria established by the 
     Governor shall require that a provider of training services 
     submit appropriate, accurate, and timely information to the 
     State for purposes of carrying out subsection (d), with 
     respect to participants receiving training services under 
     this subtitle in the applicable program, including--
       ``(A) information on degrees and industry-recognized 
     certifications received by such participants;
       ``(B) information on costs of attendance for such 
     participants;
       ``(C) information on the program completion rate for such 
     participants; and
       ``(D) information on the performance of the provider with 
     respect to the performance measures described in section 136 
     for such participants (taking into consideration the 
     characteristics of the population served and relevant 
     economic conditions), which may include information 
     specifying the percentage of such participants who entered 
     unsubsidized employment in an occupation related to the 
     program.
       ``(3) Renewal.--The criteria established by the Governor 
     shall also provide for biennial review and renewal of 
     eligibility under this section for providers of training 
     services.
       ``(4) Local criteria.--A local board in the State may 
     establish criteria in addition to the criteria established by 
     the Governor, or may require higher levels of performance 
     than required under the criteria established by the Governor, 
     for purposes of determining the eligibility of providers of 
     training services to receive funds described in subsection 
     (a) to provide the services in the local area involved.
       ``(5) Information to establish initial eligibility.--
       ``(A) In general.--In an effort to provide the highest-
     quality training services and responsiveness to new and 
     emerging industries, providers may seek initial eligibility 
     under this section as providers of training services. The 
     criteria established by the Governor shall require that a 
     provider who has not previously been an eligible provider of 
     training services under this section provide the information 
     described in subparagraph (B).
       ``(B) Information.--The provider shall provide verifiable 
     program-specific performance information supporting the 
     provider's ability to serve participants under this subtitle. 
     The information provided under this subparagraph may include 
     information on outcome measures such as job placement and 
     wage increases for individuals participating in the program, 
     information on business partnerships and other factors that 
     indicate high-quality training services, and information on 
     alignment with industries targeted for potential employment 
     opportunities.
       ``(C) Provision.--The provider shall provide the 
     information described in subparagraph (B) to the Governor and 
     the local boards in a manner that will permit the Governor 
     and the local boards to make a decision on inclusion of the 
     provider on the list of eligible providers described in 
     subsection (d).
       ``(c) Procedures.--The procedures established under 
     subsection (a) shall identify the application process for a 
     provider of training services to become eligible to receive 
     funds provided under section 133(b) for the provision of 
     training services, and identify the respective roles of the 
     State and local areas in receiving and reviewing the 
     applications and in making determinations of such eligibility 
     based on the criteria established under this section. The 
     procedures shall also establish a process for a provider of 
     training services to appeal a denial or termination of 
     eligibility under this section, that includes an opportunity 
     for a hearing and prescribes appropriate time limits to 
     ensure prompt resolution of the appeal.
       ``(d) Information To Assist Participants in Choosing 
     Providers.--In order to facilitate and assist participants in 
     choosing employment and training activities under chapter 5 
     and in choosing providers of training services, the Governor 
     shall ensure that an appropriate list of providers determined 
     to be eligible under this section in the State, accompanied 
     by appropriate information, is provided to the one-stop 
     delivery system in the State. The accompanying information 
     shall consist of information provided by providers described 
     in subparagraphs (A) and (C) of subsection (a)(2) in 
     accordance with subsection (b) (including information on 
     receipt of degrees and industry-recognized certifications, 
     and costs of attendance, for participants receiving training 
     services under this subtitle in applicable programs) and such 
     other information as the Secretary determines is appropriate. 
     The list and the accompanying information shall be made 
     available to such participants and to members of the public 
     through the one-stop delivery system in the State.
       ``(e) Enforcement.--
       ``(1) In general.--The criteria and procedures established 
     under this section shall provide the following:
       ``(A) Intentionally supplying inaccurate information.--Upon 
     a determination, by an individual or entity specified in the 
     criteria or procedures, that a provider of training services, 
     or individual providing information on behalf of the 
     provider, intentionally supplied inaccurate information under 
     this section, the eligibility of such provider to receive 
     funds under chapter 5 shall be terminated for a period of 
     time that is not less than 2 years.
       ``(B) Substantial violations.--Upon a determination, by an 
     individual or entity specified in the criteria or procedures, 
     that a provider of training services substantially violated 
     any requirement under this title, the eligibility of such 
     provider to receive funds under the program involved may be 
     terminated, or other appropriate action may be taken.
       ``(C) Repayment.--A provider of training services whose 
     eligibility is terminated under subparagraph (A) or (B) shall 
     be liable for the repayment of funds received under chapter 5 
     during a period of noncompliance described in such 
     subparagraph.
       ``(2) Construction.--Paragraph (1) shall be construed to 
     provide remedies and penalties that supplement, but do not 
     supplant, other civil and criminal remedies and penalties.
       ``(f) Agreements With Other States.--States may enter into 
     agreements, on a reciprocal basis, to permit eligible 
     providers of training services to accept career scholarship 
     accounts provided in another State.
       ``(g) Opportunity To Submit Comments.--In establishing 
     criteria, procedures, requirements for information, and the 
     list of eligible providers described in subsection (d)(1), 
     the Governor shall provide an opportunity for interested 
     members of the public to make recommendations and submit 
     comments regarding such criteria, procedures, requirements 
     for information, and list.
       ``(h) Transition Period for Implementation.--The 
     requirements of this section shall be implemented not later 
     than December 31, 2006. In order to facilitate early 
     implementation of this section, the Governor may establish 
     transition procedures under which providers eligible to 
     provide training services under chapter 5 as such chapter was 
     in effect on the day before the date of enactment of the 
     Workforce Investment Act Amendments of 2005 may continue to 
     be eligible to provide such services until December 31, 2006, 
     or until such earlier date as the Governor determines to be 
     appropriate.

[[Page 9563]]

       ``(i) On-the-Job Training, Customized Training, or 
     Incumbent Worker Training Exception.--
       ``(1) In general.--Providers of on-the-job training, 
     customized training, or incumbent worker training shall not 
     be subject to the requirements of subsections (a) through 
     (h).
       ``(2) Collection and dissemination of information.--A one-
     stop operator in a local area shall collect such performance 
     information from providers of on-the-job training, customized 
     training, and incumbent worker training as the Governor may 
     require, determine whether the providers meet such 
     performance criteria as the Governor may require, and 
     disseminate information identifying providers that meet the 
     criteria as eligible providers, and the performance 
     information, through the one-stop delivery system. Providers 
     determined to meet the criteria shall be considered to be 
     identified as eligible providers of training services.''.

     SEC. 119. ELIGIBLE PROVIDERS OF YOUTH ACTIVITIES.

       Section 123 (29 U.S.C. 2843) is amended to read as follows:

     ``SEC. 123. ELIGIBLE PROVIDERS OF YOUTH ACTIVITIES.

       ``(a) In General.--From the funds allocated under section 
     128(b) to a local area, the local board for such area shall 
     award grants or contracts on a competitive basis to providers 
     of youth activities identified based on the criteria in the 
     State plan described in section 112 and shall conduct 
     oversight with respect to such providers.
       ``(b) Exceptions.--A local board may award grants or 
     contracts on a sole-source basis if such board determines 
     there is an insufficient number of eligible providers of 
     youth activities in the local area involved (such as a rural 
     area) for grants and contracts to be awarded on a competitive 
     basis under subsection (a).''.

     SEC. 120. YOUTH ACTIVITIES.

       (a) State Allotments.--Section 127 (29 U.S.C. 2852) is 
     amended--
       (1) in subsection (a)(1), by striking ``opportunity'' and 
     inserting ``challenge''; and
       (2) by striking subsection (b) and inserting the following:
       ``(b) Allotment Among States.--
       ``(1) Youth activities.--
       ``(A) Youth challenge grants and youth activities for 
     farmworkers and native americans.--
       ``(i) In general.--For each fiscal year in which the amount 
     appropriated under section 137(a) exceeds $1,000,000,000, the 
     Secretary shall reserve a portion of the amount to provide 
     youth activities under section 167 (relating to migrant and 
     seasonal farmworker programs) and provide youth challenge 
     grants and other activities under section 169 (relating to 
     youth challenge grants).
       ``(ii) Portion.--The portion referred to in clause (i) 
     shall equal, for a fiscal year--

       ``(I) except as provided in subclause (II), the difference 
     obtained by subtracting $1,000,000,000 from the amount 
     appropriated under section 137(a) for the fiscal year; or
       ``(II) for any fiscal year in which the amount is 
     $1,250,000,000 or greater, $250,000,000.

       ``(iii) Youth activities for farmworkers.--For a fiscal 
     year described in clause (i), the Secretary shall reserve the 
     greater of $10,000,000 or 4 percent of the portion described 
     in clause (i) for a fiscal year to provide youth activities 
     under section 167. For a fiscal year not described in clause 
     (i), the Secretary shall reserve $10,000,000 of the amount 
     appropriated under section 137(a) to provide youth activities 
     under section 167.
       ``(iv) Youth activities for native americans.--From the 
     amount appropriated under section 137(a) for each fiscal year 
     that is not reserved under clause (i) or (iii), the Secretary 
     shall reserve not more than 1\1/2\ percent of such 
     appropriated amount to provide youth activities under section 
     166 (relating to Native Americans).
       ``(B) Outlying areas.--
       ``(i) In general.--From the amount appropriated under 
     section 137(a) for each fiscal year that is not reserved 
     under subparagraph (A), the Secretary shall reserve not more 
     than \1/4\ of 1 percent of the appropriated amount to provide 
     assistance to the outlying areas to carry out youth 
     activities and statewide workforce investment activities.
       ``(ii) Limitation for freely associated states.--

       ``(I) Competitive grants.--The Secretary shall use funds 
     described in clause (i) to award grants to Guam, American 
     Samoa, the Commonwealth of the Northern Mariana Islands, and 
     the Freely Associated States to carry out youth activities 
     and statewide workforce investment activities.
       ``(II) Award basis.--The Secretary shall award grants 
     pursuant to subclause (I) on a competitive basis and pursuant 
     to the recommendations of experts in the field of employment 
     and training, working through the Pacific Region Educational 
     Laboratory in Honolulu, Hawaii.
       ``(III) Assistance requirements.--Any Freely Associated 
     State that desires to receive assistance under this 
     subparagraph shall submit an application to the Secretary and 
     shall include in the application for assistance--

       ``(aa) information demonstrating that the Freely Associated 
     State will meet all conditions that apply to States under 
     this title;
       ``(bb) an assurance that, notwithstanding any other 
     provision of this title, the Freely Associated State will use 
     such assistance only for the direct provision of services; 
     and
       ``(cc) such other information and assurances as the 
     Secretary may require.

       ``(IV) Administrative costs.--The Secretary may provide not 
     more than 5 percent of the funds made available for grants 
     under subclause (I) to pay the administrative costs of the 
     Pacific Region Educational Laboratory in Honolulu, Hawaii, 
     regarding activities assisted under this clause.

       ``(iii) Additional requirement.--The provisions of Public 
     Law 95-134, permitting the consolidation of grants by the 
     outlying areas, shall not apply to assistance provided to 
     those areas, including the Freely Associated States, under 
     this subparagraph.
       ``(C) States.--
       ``(i) In general.--From the remainder of the amount 
     appropriated under section 137(a) for a fiscal year that 
     exists after the Secretary determines the amounts to be 
     reserved under subparagraphs (A) and (B), the Secretary shall 
     allot to the States--

       ``(I) an amount of the remainder that is less than or equal 
     to the total amount that was allotted to States for fiscal 
     year 2005 under section 127(b)(1)(C) of this Act (as in 
     effect on the day before the date of enactment of the 
     Workforce Investment Act Amendments of 2005), in accordance 
     with the requirements of such section 127(b)(1)(C); and
       ``(II) the amount of the remainder, if any, in excess of 
     the amount referred to in subclause (I), in accordance with 
     clause (ii).

       ``(ii) Formula.--Subject to clauses (iii) and (iv), of the 
     amount described in clause (i)(II)--

       ``(I) 33\1/3\ percent shall be allotted on the basis of the 
     relative number of individuals in the civilian labor force 
     who are ages 16 through 21 in each State, compared to the 
     total number of individuals in the civilian labor force who 
     are ages 16 through 21 in all States;
       ``(II) 33\1/3\ percent shall be allotted on the basis of 
     the relative number of unemployed individuals in each State, 
     compared to the total number of unemployed individuals in all 
     States; and
       ``(III) 33\1/3\ percent shall be allotted on the basis of 
     the relative number of disadvantaged youth who are ages 16 
     through 21 in each State, compared to the total number of 
     disadvantaged youth who are ages 16 through 21 in all States.

       ``(iii) Minimum and maximum percentages.--

       ``(I) Minimum percentage.--The Secretary shall ensure that 
     no State shall receive an allotment percentage under this 
     subparagraph for a fiscal year that is less than 90 percent 
     of the allotment percentage of the State for the preceding 
     fiscal year.
       ``(II) Maximum percentage.--Subject to subclause (I), the 
     Secretary shall ensure that no State shall receive an 
     allotment percentage under this subparagraph for a fiscal 
     year that is more than 130 percent of the allotment 
     percentage of the State for the preceding fiscal year.

       ``(iv) Small state minimum allotment.--Subject to clause 
     (iii), the Secretary shall ensure that no State shall receive 
     an allotment under this subparagraph that is less than the 
     total of--

       ``(I) \3/10\ of 1 percent of $1,000,000,000 of the 
     remainder described in clause (i) for the fiscal year; and
       ``(II) if the remainder described in clause (i) for the 
     fiscal year exceeds $1,000,000,000, \2/5\ of 1 percent of the 
     excess.

       ``(2) Definitions.--For the purposes of paragraph (1):
       ``(A) Allotment percentage.--The term `allotment 
     percentage', used with respect to fiscal year 2006 or a 
     subsequent fiscal year, means a percentage of the remainder 
     described in paragraph (1)(C)(i) that is received by the 
     State involved through an allotment made under this 
     subsection for the fiscal year. The term, used with respect 
     to fiscal year 2005, means the percentage of the amounts 
     allotted to States under this chapter (as in effect on the 
     day before the date of enactment of the Workforce Investment 
     Act Amendments of 2005) that is received by the State 
     involved for fiscal year 2005.
       ``(B) Disadvantaged youth.--Subject to paragraph (3), the 
     term `disadvantaged youth' means an individual who is age 16 
     through 21 who received an income, or is a member of a family 
     that received a total family income, that, in relation to 
     family size, does not exceed the higher of--
       ``(i) the poverty line; or
       ``(ii) 70 percent of the lower living standard income 
     level.
       ``(C) Freely associated state.--The term `Freely Associated 
     State' means the Republic of the Marshall Islands, the 
     Federated States of Micronesia, and the Republic of Palau.
       ``(3) Special rule.--For purposes of the formula specified 
     in paragraph (1)(C), the Secretary shall, as appropriate and 
     to the extent practicable, exclude college students and 
     members of the Armed Forces from the determination of the 
     number of disadvantaged youth.''.
       (b) Reallotment.--
       (1) Amendment.--Section 127(c) (29 U.S.C. 2852(c)) is 
     amended--
       (A) by striking paragraph (2) and inserting the following:

[[Page 9564]]

       ``(2) Amount.--The amount available for reallotment for a 
     program year is equal to the amount by which the unexpended 
     balance at the end of the program year prior to the program 
     year for which the determination is made exceeds 30 percent 
     of the total amount of funds available to the State under 
     this section during such prior program year (including 
     amounts allotted to the State in all prior program years that 
     remained available). For purposes of this paragraph, the 
     unexpended balance is the amount that is the difference 
     between--
       ``(A) the total amount of funds available to the State 
     under this section during the program year prior to the 
     program year for which the determination is made (including 
     amounts allotted to the State in all prior program years that 
     remained available); and
       ``(B) the accrued expenditures during such prior program 
     year.'';
       (B) in paragraph (3)--
       (i) by striking ``for the prior program year'' and 
     inserting ``for the program year for which the determination 
     is made''; and
       (ii) by striking ``such prior program year'' and inserting 
     ``such program year'';
       (C) by striking paragraph (4) and inserting the following:
       ``(4) Eligibility.--For purposes of this subsection, an 
     eligible State means a State that does not have an amount 
     available for reallotment under paragraph (2) for the program 
     year for which the determination under paragraph (2) is 
     made.''; and
       (D) in paragraph (5), by striking ``obligation'' and 
     inserting ``accrued expenditure''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall take effect for the program year that begins after the 
     date of enactment of this Act.
       (c) Within State Allocations.--
       (1) Reservation for statewide activities.--Section 128(a) 
     (29 U.S.C. 2853(a)) is amended to read as follows:
       ``(a) Reservations for Statewide Activities.--
       ``(1) In general.--The Governor of a State shall reserve 
     not more than 15 percent of each of the amounts allotted to 
     the State under section 127(b)(1)(C) and paragraphs (1)(B) 
     and (2)(B) of section 132(b) for a fiscal year for statewide 
     workforce investment activities.
       ``(2) Use of funds.--Regardless of whether the reserved 
     amounts were allotted under section 127(b)(1)(C), or under 
     paragraph (1)(B) or (2)(B) of section 132(b), the Governor 
     may use the reserved amounts to carry out statewide 
     activities under section 129(b) or statewide employment and 
     training activities, for adults or dislocated workers, under 
     section 134(a).''.
       (2) Within state allocation.--Section 128(b) (29 U.S.C. 
     2853(b)) is amended to read as follows:
       ``(b) Within State Allocations.--
       ``(1) In general.--Of the amount allotted to the State 
     under section 127(b)(1)(C) and not reserved under subsection 
     (a)(1)--
       ``(A) a portion equal to not less than 80 percent of such 
     amount shall be allocated by the Governor to local areas in 
     accordance with paragraph (2); and
       ``(B) a portion equal to not more than 20 percent of such 
     amount may be allocated by the Governor to local areas in 
     accordance with paragraph (3).
       ``(2) Established formula.--
       ``(A) In general.--Of the portion described in paragraph 
     (1)(A), the Governor shall allocate--
       ``(i) 33\1/3\ percent on the basis of the relative number 
     of individuals in the civilian labor force who are ages 16 
     through 21 in each local area, compared to the total number 
     of individuals in the civilian labor force who are ages 16 
     through 21 in all local areas in the State;
       ``(ii) 33\1/3\ percent on the basis of the relative number 
     of unemployed individuals in each local area, compared to the 
     total number of unemployed individuals in all local areas in 
     the State; and
       ``(iii) 33\1/3\ percent on the basis of the relative number 
     of disadvantaged youth who are ages 16 through 21 in each 
     local area, compared to the total number of disadvantaged 
     youth who are ages 16 through 21 in all local areas in the 
     State.
       ``(B) Minimum and maximum percentages.--
       ``(i) Minimum percentage.--The Governor shall ensure that 
     no local area shall receive an allocation percentage under 
     this paragraph for a fiscal year that is less than 90 percent 
     of the allocation percentage of the local area for the 
     preceding fiscal year.
       ``(ii) Maximum percentage.--Subject to clause (i), the 
     Governor shall ensure that no local area shall receive an 
     allocation percentage under this paragraph for a fiscal year 
     that is more than 130 percent of the allocation percentage of 
     the local area for the preceding fiscal year.
       ``(C) Definitions.--In this paragraph:
       ``(i) Allocation percentage.--The term `allocation 
     percentage', used with respect to fiscal year 2006 or a 
     subsequent fiscal year, means a percentage of the portion 
     described in paragraph (1)(A) that is received by the local 
     area involved through an allocation made under this paragraph 
     for the fiscal year. The term, used with respect to fiscal 
     year 2005, means the percentage of the amounts allocated to 
     local areas under this chapter (as in effect on the day 
     before the date of enactment of the Workforce Investment Act 
     Amendments of 2005) that is received by the local area 
     involved for fiscal year 2005.
       ``(ii) Disadvantaged youth.--The term `disadvantaged youth' 
     means an individual who--

       ``(I) is age 16 through 21;
       ``(II) is not a college student or member of the Armed 
     Forces; and
       ``(III) received an income, or is a member of a family that 
     received a total family income, that, in relation to family 
     size, does not exceed the higher of--

       ``(aa) the poverty line; or
       ``(bb) 70 percent of the lower living standard income 
     level.
       ``(3) Youth discretionary allocation.--The Governor may 
     allocate the portion described in paragraph (1)(B) to local 
     areas where there are a significant number of eligible youth, 
     after consultation with the State board and local boards.
       ``(4) Local administrative cost limit.--
       ``(A) In general.--Of the amount allocated to a local area 
     under this subsection and section 133(b) for a fiscal year, 
     not more than 10 percent of the amount may be used by the 
     local board involved for the administrative costs of carrying 
     out local workforce investment activities under this chapter 
     or chapter 5.
       ``(B) Use of funds.--Funds made available for 
     administrative costs under subparagraph (A) may be used for 
     the administrative costs of any of the local workforce 
     investment activities described in this chapter or chapter 5, 
     regardless of whether the funds were allocated under this 
     subsection or section 133(b).''.
       (3) Reallocation.--
       (A) Amendment.--Section 128(c) (29 U.S.C. 2853(c)) is 
     amended--
       (i) in paragraph (1), by striking ``paragraph (2)(A) or (3) 
     of'';
       (ii) by striking paragraph (2) and inserting the following:
       ``(2) Amount.--The amount available for reallocation for a 
     program year is equal to the amount by which the unexpended 
     balance at the end of the program year prior to the program 
     year for which the determination is made exceeds 30 percent 
     of the total amount of funds available to the local area 
     under this section during such prior program year (including 
     amounts allocated to the local area in all prior program 
     years that remained available). For purposes of this 
     paragraph, the unexpended balance is the amount that is the 
     difference between--
       ``(A) the total amount of funds available to the local area 
     under this section during the program year prior to the 
     program year for which the determination is made (including 
     amounts allocated to the local area in all prior program 
     years that remained available); and
       ``(B) the accrued expenditures during such prior program 
     year.'';
       (iii) by amending paragraph (3)--

       (I) by striking ``subsection (b)(3)'' each place it appears 
     and inserting ``subsection (b)'';
       (II) by striking ``for the prior program year'' the first 
     place it appears and inserting ``for the program year for 
     which the determination is made'';
       (III) by striking ``such prior program year'' and inserting 
     ``such program year''; and
       (IV) by striking the last sentence; and

       (iv) by striking paragraph (4) and inserting the following:
       ``(4) Eligibility.--For purposes of this subsection, an 
     eligible local area means a local area that does not have an 
     amount available for reallocation under paragraph (2) for the 
     program year for which the determination under paragraph (2) 
     is made.''.
       (B) Effective date.--The amendments made by subparagraph 
     (A) shall take effect for the later of--
       (i) the program year that begins after the date of 
     enactment of this Act; or
       (ii) program year 2006.
       (d) Youth Participant Eligibility.--Section 129(a) (29 
     U.S.C. 2854(a)) is amended to read as follows:
       ``(a) Youth Participant Eligibility.--
       ``(1) Eligibility.--
       ``(A) In general.--To be eligible to participate in 
     activities carried out under this chapter during any program 
     year an individual shall, at the time the eligibility 
     determination is made, be an out-of-school youth or an in-
     school youth.
       ``(B) Out-of-school youth.--In this title the term `out-of-
     school youth' means an individual who is--
       ``(i) not younger than age 16 nor older than age 21; and
       ``(ii) one of the following:

       ``(I) A school dropout.
       ``(II) A youth who is within the age for compulsory school 
     attendance, but has not attended school for at least 1 school 
     year calendar quarter.
       ``(III) A recipient of a secondary school diploma or its 
     equivalent who is--

       ``(aa) deficient in basic skills, including limited English 
     proficiency;
       ``(bb) a low-income individual; and
       ``(cc) not attending any school.

       ``(IV) Subject to the juvenile or adult justice system or 
     ordered by a court to an alternative school.

[[Page 9565]]

       ``(V) A low-income individual who is pregnant or parenting 
     and not attending any school.

       ``(VI) A youth who is not attending school or a youth 
     attending an alternative school, who is homeless, a runaway, 
     a foster child, a child eligible for assistance under section 
     477 of the Social Security Act (42 U.S.C. 677), or in an out-
     of-home placement.
       ``(VII) A low-income individual who is not attending school 
     and requires additional assistance to enter or complete an 
     educational program or to secure or hold employment.

       ``(C) In-school youth.--In this section the term `in-school 
     youth' means an individual who is--
       ``(i) not younger than age 14 nor older than age 21;
       ``(ii) a low-income individual; and
       ``(iii) one or more of the following:

       ``(I) Deficient in basic literacy skills, including limited 
     English proficiency.
       ``(II) Homeless, a runaway, a foster child, a child 
     eligible for assistance under section 477 of the Social 
     Security Act (42 U.S.C. 677), or in an out-of-home placement.
       ``(III) Pregnant or parenting.
       ``(IV) An offender (other than an individual described in 
     subparagraph (B)(ii)(IV)).
       ``(V) An individual who requires additional assistance to 
     complete an educational program or to secure or hold 
     employment.

       ``(2) Exception.--Not more than 5 percent of the 
     individuals assisted under this section in each local area, 
     in the case of individuals for whom low income is a 
     requirement for eligibility under this section, may be 
     individuals who are not low income.
       ``(3) Limitations on activities for in-school youth.--
       ``(A) In general.--For any program year, not more than 60 
     percent of the funds available for statewide activities under 
     subsection (b), and not more than 60 percent of funds 
     available to local areas under subsection (c), may be used to 
     provide activities for in-school youth meeting the 
     requirements of paragraph (1)(B).
       ``(B) Exception.--A State that receives a minimum allotment 
     under section 127(b)(1) in accordance with section 
     127(b)(1)(C)(iv) or under section 132(b)(1) in accordance 
     with section 132(b)(1)(B)(iv)(II) may increase the percentage 
     described in subparagraph (A) for a local area in the State, 
     if--
       ``(i) after an analysis of the eligible youth population in 
     the local area, the State determines that the local area will 
     be unable to use at least 40 percent of the funds available 
     for activities under subsection (b) or (c) to serve out-of-
     school youth due to a low number of out-of-school youth; and
       ``(ii)(I) the State submits to the Secretary, for the local 
     area, a request including a proposed increased percentage for 
     purposes of subparagraph (A), and the summary of the eligible 
     youth population analysis; and
       ``(II) the request is approved by the Secretary.
       ``(4) Consistency with compulsory school attendance laws.--
     In providing assistance under this section to an individual 
     who is required to attend school under applicable State 
     compulsory school attendance laws, the priority in providing 
     such assistance shall be for the individual to attend school 
     regularly.''.
       (e) Statewide Activities.--Section 129(b) (29 U.S.C. 
     2854(b)) is amended to read as follows:
       ``(b) Statewide Activities.--
       ``(1) In general.--Funds reserved by a Governor for a State 
     as described in sections 128(a) and 133(a)(1) shall be used, 
     regardless of whether the funds were allotted to the State 
     under section 127(b)(1)(C) or under paragraph (1)(B) or 
     (2)(B) of section 132(b) for statewide activities, which may 
     include--
       ``(A) conducting--
       ``(i) evaluations under section 136(e) of activities 
     authorized under this chapter and chapter 5 in coordination 
     with evaluations carried out by the Secretary under section 
     172;
       ``(ii) research; and
       ``(iii) demonstration projects;
       ``(B) providing incentive grants to local areas for 
     regional cooperation among local boards (including local 
     boards in a designated region as described in section 
     116(c)), for local coordination of activities carried out 
     under this title, and for performance by local areas as 
     described in section 136(i)(2);
       ``(C) providing technical assistance and capacity building 
     activities to local areas, one-stop operators, one-stop 
     partners, and eligible providers, including the development 
     and training of staff, the development of exemplary program 
     activities, the provision of technical assistance to local 
     areas that fail to meet local performance measures described 
     in section 136(c), and the provision of technology to 
     facilitate remote access to services provided through the 
     one-stop delivery system in the State;
       ``(D) operating a fiscal and management accountability 
     information system under section 136(f);
       ``(E) carrying out monitoring and oversight of activities 
     carried out under this chapter and chapter 5, which may 
     include a review comparing the services provided to male and 
     female youth;
       ``(F) providing additional assistance to local areas that 
     have high concentrations of eligible youth;
       ``(G) supporting the development of alternative programs 
     and other activities that enhance the choices available to 
     eligible youth and encourage such youth to reenter secondary 
     education, enroll in postsecondary education and advanced 
     training, and obtain career path employment;
       ``(H) supporting the provision of core services described 
     in section 134(d)(2) in the one-stop delivery system in the 
     State; and
       ``(I) supporting financial literacy, including--
       ``(i) supporting the ability to create household budgets, 
     initiate savings plans, and make strategic investment 
     decisions for education, retirement, home ownership, wealth 
     building, or other savings goals;
       ``(ii) supporting the ability to manage spending, credit, 
     and debt, including credit card debt, effectively;
       ``(iii) increasing awareness of the availability and 
     significance of credit reports and credit scores in obtaining 
     credit, the importance of their accuracy (and how to correct 
     inaccuracies), their effect on credit terms, and the effect 
     common financial decisions may have on credit scores;
       ``(iv) supporting the ability to ascertain fair and 
     favorable credit terms;
       ``(v) supporting the ability to avoid abusive, predatory, 
     or deceptive credit offers and financial products;
       ``(vi) supporting the ability to understand, evaluate, and 
     compare financial products, services, and opportunities;
       ``(vii) supporting the ability to understand resources that 
     are easily accessible and affordable, and that inform and 
     educate an investor as to the investor's rights and avenues 
     of recourse when the investor believes the investor's rights 
     have been violated by unprofessional conduct of market 
     intermediaries;
       ``(viii) increasing awareness of the particular financial 
     needs and financial transactions (such as the sending of 
     remittances) of consumers who are targeted in multilingual 
     financial literacy and education programs and improving the 
     development and distribution of multilingual financial 
     literacy and education materials;
       ``(ix) promoting bringing individuals who lack basic 
     banking services into the financial mainstream by opening and 
     maintaining accounts with financial institutions; and
       ``(x) improving financial literacy and education through 
     all other related skills, including personal finance and 
     related economic education, with the primary goal of programs 
     not simply to improve knowledge, but rather to improve 
     consumers' financial choices and outcomes.
       ``(2) Limitation.--Not more than 5 percent of the funds 
     allotted to a State under section 127(b)(1)(C) shall be used 
     by the State for administrative activities carried out under 
     this subsection or section 134(a).
       ``(3) Prohibition.--No funds described in this subsection 
     may be used to develop or implement education curricula for 
     school systems in the State.''.
       (f) Local Elements and Requirements.--
       (1) Program design.--Section 129(c)(1) (29 U.S.C. 
     2854(c)(1)) is amended--
       (A) in the matter that precedes subparagraph (A), by 
     striking ``paragraph (2)(A) or (3), as appropriate, of'';
       (B) in subparagraph (B), by inserting ``are directly linked 
     to 1 or more of the performance measures relating to this 
     chapter under section 136, and that'' after ``for each 
     participant that''; and
       (C) in subparagraph (C)--
       (i) by redesignating clauses (i) through (iv) as clauses 
     (ii) through (v), respectively;
       (ii) by inserting before clause (ii) (as redesignated by 
     clause (i)) the following:
       ``(i) activities leading to the attainment of a secondary 
     school diploma or its equivalent, or another recognized 
     credential;'';
       (iii) in clause (ii) (as redesignated by clause (i)), by 
     inserting ``and advanced training'' after ``opportunities'';
       (iv) in clause (iii) (as redesignated by clause (i))--

       (I) by inserting ``instruction based on State academic 
     content and student academic achievement standards 
     established under section 1111 of the Elementary and 
     Secondary Education Act of 1965 (20 U.S.C. 6311)'' after 
     ``academic''; and
       (II) by inserting ``that lead to the attainment of 
     recognized credentials'' after ``learning''; and

       (v) by striking clause (v) (as redesignated by clause (i)) 
     and inserting the following:
       ``(v) effective connections to all employers, including 
     small employers, in sectors of the local and regional labor 
     markets that are experiencing high growth in employment 
     opportunities.''.
       (2) Program elements.--Section 129(c)(2) (29 U.S.C. 
     2854(c)(2)) is amended--
       (A) in subparagraph (A), by striking ``secondary school, 
     including dropout prevention strategies'' and inserting ``the 
     requirements for a secondary school diploma or its recognized 
     equivalent (including recognized alternative standards for 
     individuals with disabilities) or for another recognized 
     credential, including dropout prevention strategies'';
       (B) in subparagraph (B), by inserting ``, with a priority 
     on exposing youth to technology and nontraditional jobs'' 
     before the semicolon;
       (C) in subparagraph (F), by striking ``during nonschool 
     hours'';

[[Page 9566]]

       (D) in subparagraph (I), by striking ``and'' at the end;
       (E) in subparagraph (J), by striking the period at the end 
     and inserting a semicolon; and
       (F) by adding at the end the following:
       ``(K) on-the-job training opportunities;
       ``(L) opportunities to acquire financial literacy skills;
       ``(M) entrepreneurial skills training and microenterprise 
     services; and
       ``(N) information about average wages for a range of jobs 
     available in the local area, including technology jobs.''.
       (3) Additional requirements.--Section 129(c)(3)(A) (29 
     U.S.C. 2854(c)(3)(A)) is amended in the matter preceding 
     clause (i) by striking ``or applicant who meets the minimum 
     income criteria to be considered an eligible youth''.
       (4) Priority and exceptions.--Section 129(c) (29 U.S.C. 
     2854(c)) is amended by striking paragraphs (4) and (5).
       (5) Prohibitions and linkages.--Section 129(c) (29 U.S.C. 
     2854(c)), as amended by paragraph (4), is further amended--
       (A) by redesignating paragraphs (6), (7), and (8) as 
     paragraphs (4), (5), and (6), respectively;
       (B) in paragraph (4) (as redesignated by subparagraph 
     (A))--
       (i) by striking subparagraph (B); and
       (ii) by redesignating subparagraph (C) as subparagraph (B); 
     and
       (C) in paragraph (5) (as redesignated by subparagraph (A)), 
     by striking ``youth councils'' and inserting ``local 
     boards''.

     SEC. 121. ADULT AND DISLOCATED WORKER EMPLOYMENT AND TRAINING 
                   ACTIVITIES.

       (a) State Allotments.--
       (1) Reservations.--Section 132(a)(2)(A) (29 U.S.C. 2862 
     (a)(2)(A)) is amended by striking ``national emergency 
     grants, other than under subsection (a)(4), (f), and (g)'' 
     and inserting ``national dislocated worker grants, other than 
     under paragraph (4) or (5) of subsection (a), subsection (e), 
     and subsection (f)''.
       (2) Allotment among states.--Section 132(b) (29 U.S.C. 
     2862(b)) is amended--
       (A) in paragraph (1)(A)(ii), by striking ``section 
     127(b)(1)(B),'' and all that follows and inserting ``section 
     127(b)(1)(B).'';
       (B) by striking paragraph (1)(B)(ii) and inserting the 
     following:
       ``(ii) Formula.--Subject to clauses (iii) and (iv), of the 
     remainder--

       ``(I) 40 percent shall be allotted on the basis of the 
     relative number of unemployed individuals in areas of 
     substantial unemployment in each State, compared to the total 
     number of unemployed individuals in areas of substantial 
     unemployment in all States;
       ``(II) 25 percent shall be allotted on the basis of the 
     relative number of individuals in the civilian labor force in 
     each State, compared to the total number of such individuals 
     in all States; and
       ``(III) 35 percent shall be allotted on the basis of the 
     relative number of disadvantaged adults in each State, 
     compared to the total number of disadvantaged adults in all 
     States, except as described in clause (iii).'';

       (C) in paragraph (1)(B)--
       (i) in clause (iii), by striking ``section 116(a)(2)(B)'' 
     and inserting ``section 116(a)(2)(A)(iii)'';
       (ii) in clause (iv)--

       (I) in subclause (I)--

       (aa) by striking ``Subject to subclause (IV), the'' and 
     inserting ``The''; and
       (bb) by striking ``than the greater of'' and all that 
     follows and inserting ``than an amount based on 90 percent of 
     the allotment percentage of the State for the preceding 
     fiscal year.'';

       (II) in subclause (II), by striking ``subclauses (I), 
     (III), and (IV)'' and inserting ``subclauses (I) and (III)''; 
     and
       (III) by striking subclause (IV); and

       (iii) in clause (v), by striking subclause (VI); and
       (D) in paragraph (2)(A)(ii), by striking ``section 
     127(b)(1)(B)'' and all that follows and inserting ``section 
     127(b)(1)(B).''.
       (3) Reallotment.--Section 132(c) (29 U.S.C. 2862(c)) is 
     amended--
       (A) by striking paragraph (2) and inserting the following:
       ``(2) Amount.--The amount available for reallotment for a 
     program year for programs funded under subsection (b)(1)(B) 
     (relating to adult employment and training) and subsection 
     (b)(2)(B) (relating to dislocated worker employment and 
     training), respectively, is equal to the amount by which the 
     unexpended balance at the end of the program year prior to 
     the program year for which the determination is made exceeds 
     30 percent of the total amount of funds available to the 
     State under subsection (b)(1)(B) or (b)(2)(B), respectively, 
     during such prior program year (including amounts allotted to 
     the State in all prior program years under such provisions 
     that remained available). For purposes of this paragraph, the 
     unexpended balance is the amount that is the difference 
     between--
       ``(A) the total amount of funds available to the State 
     under subsection (b)(1)(B) or (b)(2)(B), respectively, during 
     the program year prior to the program year for which the 
     determination is made (including amounts allotted to the 
     State in all prior program years under such provisions that 
     remained available); and
       ``(B) the accrued expenditures from such total amount of 
     funds available under subsection (b)(1)(B) or (b)(2)(B), 
     respectively, during such prior program year.'';
       (B) in paragraph (3)--
       (i) by striking ``under this section for such activities 
     for the prior program year'' and inserting ``under subsection 
     (b)(1)(B) or (b)(2)(B), as appropriate, for the program year 
     for which the determination is made''; and
       (ii) by striking ``under this section for such activities 
     for such prior program year'' and inserting ``under 
     subsection (b)(1)(B) or (b)(2)(B), as appropriate, for such 
     program year'';
       (C) by striking paragraph (4) and inserting the following:
       ``(4) Eligibility.--For purposes of this subsection, an 
     eligible State means--
       ``(A) with respect to funds allotted under subsection 
     (b)(1)(B), a State that does not have an amount of such funds 
     available for reallotment under paragraph (2) for the program 
     year for which the determination under paragraph (2) is made; 
     and
       ``(B) with respect to funds allotted under subsection 
     (b)(2)(B), a State that does not have an amount of such funds 
     available for reallotment under paragraph (2) for the program 
     year for which the determination under paragraph (2) is 
     made.''; and
       (D) in paragraph (5), by striking ``obligation'' and 
     inserting ``accrued expenditure''.
       (4) Effective date.--The amendments made by paragraph (3) 
     shall take effect for the later of--
       (A) the program year that begins after the date of 
     enactment of this Act; or
       (B) program year 2006.
       (b) Within State Allocations.--
       (1) Allocation.--Section 133(b)(2)(A)(i) (29 U.S.C. 
     2863(b)(2)(A)(i)) is amended--
       (A) in subclause (I), by striking ``33\1/3\ percent'' and 
     inserting ``40 percent'';
       (B) in subclause (II), by striking ``33\1/3\ percent'' and 
     inserting ``25 percent''; and
       (C) in subclause (III), by striking ``33\1/3\ percent'' and 
     inserting ``35 percent''.
       (2) Transfer authority.--Section 133(b)(4) (29 U.S.C. 
     2863(b)(4)) is amended by striking ``20 percent'' each place 
     it appears and inserting ``45 percent''.
       (3) Requirements.--Clauses (i) and (ii) of section 
     133(b)(5)(B) (29 U.S.C. 2863(b)(5)(B)) are amended by 
     striking ``section 134(c)'' and inserting ``section 121(e)''.
       (4) Reallocation.--Section 133(c) (29 U.S.C. 2863(c)) is 
     amended--
       (A) in paragraph (1), by inserting ``, and under subsection 
     (b)(2)(B) for dislocated worker employment and training 
     activities,'' after ``activities'';
       (B) by striking paragraph (2) and inserting the following:
       ``(2) Amount.--The amount available for reallocation for a 
     program year for programs funded under paragraphs (2)(A) and 
     (3) of subsection (b) (relating to adult employment and 
     training) and subsection (b)(2)(B) (relating to dislocated 
     worker employment and training), respectively, is equal to 
     the amount by which the unexpended balance at the end of the 
     program year prior to the program year for which the 
     determination is made exceeds 30 percent of the total amount 
     of funds available to the local area under paragraphs (2)(A) 
     and (3) of subsection (b), or subsection (b)(2)(B), 
     respectively, during such prior program year (including 
     amounts allocated to the local area in all prior program 
     years under such provisions that remained available). For 
     purposes of this paragraph, the unexpended balance is the 
     amount that is the difference between--
       ``(A) the total amount of funds available to the local area 
     under paragraphs (2)(A) and (3) of subsection (b), or 
     subsection (b)(2)(B), respectively, during the program year 
     prior to the program year for which the determination is made 
     (including amounts allotted to the local area in all prior 
     program years under such provisions that remained available); 
     and
       ``(B) the accrued expenditures from such total amount of 
     funds available under paragraphs (2)(A) and (3) of subsection 
     (b), or subsection (b)(2)(B), respectively, during such prior 
     program year.'';
       (C) by striking paragraph (3) and inserting the following:
       ``(3) Reallocation.--In making reallocations to eligible 
     local areas of amounts available pursuant to paragraph (2) 
     for a program year, the Governor shall allocate to each 
     eligible local area within the State--
       ``(A) with respect to amounts that are available for 
     reallocation under paragraph (2) that were allocated under 
     paragraphs (2)(A) or (3) of subsection (b), an amount based 
     on the relative amount allocated to such local area under 
     paragraphs (2)(A) or (3) of subsection (b), as appropriate, 
     for the program year for which the determination is made, as 
     compared to the total amount allocated to all eligible local 
     areas under paragraphs (2)(A) or (3) of subsection (b), as 
     appropriate, for such program year; and
       ``(B) with respect to amounts that are available for 
     reallocation under paragraph (2) that were allocated under 
     subsection (b)(2)(B), an amount based on the relative amount 
     allocated to such local area under subsection (b)(2)(B) for 
     the program year for which the determination is made, as 
     compared to the total amount allocated to all eligible local 
     areas under subsection (b)(2)(B) for such program year.''; 
     and

[[Page 9567]]

       (D) by striking paragraph (4) and inserting the following:
       ``(4) Eligibility.--For purposes of this subsection, an 
     eligible local area means--
       ``(A) with respect to funds allocated under paragraphs 
     (2)(A) or (3) of subsection (b), a local area that does not 
     have an amount of such funds available for reallocation under 
     paragraph (2) for the program year for which the 
     determination under paragraph (2) is made; and
       ``(B) with respect to funds allocated under subsection 
     (b)(2)(B), a local area that does not have an amount of such 
     funds available for reallocation under paragraph (2) for the 
     program year for which the determination under paragraph (2) 
     is made.''.
       (5) Effective date.--The amendments made by paragraph (3) 
     shall take effect for the later of--
       (A) the program year that begins after the date of 
     enactment of this Act; or
       (B) program year 2006.
       (c) Use of Funds for Employment and Training Activities.--
       (1) Statewide employment and training activities.--
       (A) Statewide rapid response activities.--Section 
     134(a)(2)(A) (29 U.S.C. 2864(a)(2)(A)) is amended to read as 
     follows:
       ``(A) Statewide rapid response activities.--
       ``(i) In general.--A State shall carry out statewide rapid 
     response activities using funds reserved by a Governor for a 
     State under section 133(a)(2). Such activities shall 
     include--

       ``(I) provision of rapid response activities, carried out 
     in local areas by the State or by an entity designated by the 
     State, working in conjunction with the local boards and the 
     chief elected officials for the local areas; and
       ``(II) provision of additional assistance to local areas 
     that experience disasters, mass layoffs, or plant closings, 
     or other events that precipitate substantial increases in the 
     number of unemployed individuals, carried out in local areas 
     by the State, working in conjunction with the local boards 
     and the chief elected officials for the local areas.

       ``(ii) Use of unexpended funds.--Funds reserved under 
     section 133(a)(2) to carry out this subparagraph that remain 
     unexpended after the first program year for which such funds 
     were allotted may be used by the Governor to carry out 
     statewide activities authorized under subparagraph (B) and 
     paragraph (3)(A) in addition to activities under this 
     subparagraph.''.
       (B) Statewide employment and training activities.--Section 
     134(a)(2) (29 U.S.C. 2864(a)(2)) is amended by striking 
     subparagraph (B) and inserting the following:
       ``(B) Statewide employment and training activities.--Funds 
     reserved by a Governor for a State under sections 128(a)(1) 
     and 133(a)(1) and not used under paragraph (1)(A) (regardless 
     of whether the funds were allotted to the States under 
     section 127(b)(1)(C) or paragraphs (1)(B) or (2)(B) of 
     section 132(b)) shall be used for statewide employment and 
     training activities, including--
       ``(i) disseminating--

       ``(I) the State list of eligible providers of training 
     services, including eligible providers of nontraditional 
     training services and eligible providers of apprenticeship 
     programs described in section 122(a)(2)(B);
       ``(II) information identifying eligible providers of on-
     the-job training, customized training, and incumbent worker 
     training;
       ``(III) information on effective business outreach, 
     partnerships, and services;
       ``(IV) performance information and information on costs of 
     attendance, as described in subsections (d) and (i) of 
     section 122; and
       ``(V) information on physical and programmatic 
     accessibility for individuals with disabilities;

       ``(ii) conducting evaluations under section 136(e) of 
     activities authorized under this chapter and chapter 5 in 
     coordination with evaluations carried out by the Secretary 
     under section 172;
       ``(iii) providing incentive grants to local areas, in 
     accordance with section 136(i);
       ``(iv) developing strategies for ensuring that activities 
     carried out under this section are placing men and women in 
     jobs, education, and training that lead to comparable pay;
       ``(v) providing technical assistance and capacity building 
     to local areas, one-stop operators, one-stop partners, and 
     eligible providers, including the development and training of 
     staff, the development of exemplary program activities, and 
     the provision of technical assistance to local areas that 
     fail to meet local performance measures described in section 
     136(c), which may include the development and training of 
     staff to provide opportunities for hard-to-serve populations 
     to enter high-wage, high-skilled, and nontraditional 
     occupations;
       ``(vi) operating a fiscal and management accountability 
     system under section 136(f); and
       ``(vii) carrying out monitoring and oversight of activities 
     carried out under this chapter and chapter 4.''.
       (C) Allowable statewide employment and training 
     activities.--Section 134(a)(3)(A) (29 U.S.C. 2864(a)(3)(A) is 
     amended to read as follows:
       ``(A) In general.--Funds reserved by a Governor for a State 
     under sections 128(a)(1) and 133(a)(1) and not used under 
     paragraph (1)(A) or (2)(B) (regardless of whether the funds 
     were allotted to the State under section 127(b)(1)(C) or 
     paragraph (1)(B) or (2)(B) of section 132(b)) may be used to 
     carry out additional statewide employment and training 
     activities, which may include--
       ``(i) implementing innovative programs and strategies 
     designed to meet the needs of all businesses in the State, 
     including small businesses, which may include incumbent 
     worker training programs, sectoral and industry cluster 
     strategies and partnerships, including regional skills 
     alliances, career ladder programs, micro-enterprise and 
     entrepreneurial training and support programs, utilization of 
     effective business intermediaries, activities to improve 
     linkages between the one-stop delivery system in the State 
     and all employers (including small employers) in the State, 
     and other business services and strategies that better engage 
     employers in workforce investment activities and make the 
     workforce investment system more relevant to the needs of 
     State and local businesses, consistent with the objectives of 
     this title;
       ``(ii) developing strategies for effectively serving hard-
     to-serve populations and for coordinating programs and 
     services among one-stop partners;
       ``(iii) implementing innovative programs for displaced 
     homemakers, which for purposes of this clause may include an 
     individual who is receiving public assistance and is within 2 
     years of exhausting lifetime eligibility under part A of 
     title IV of the Social Security Act (42 U.S.C. 601 et seq.);
       ``(iv) implementing programs to increase the number of 
     individuals training for and placed in nontraditional 
     employment;
       ``(v) carrying out activities to facilitate remote access 
     to services, including training services described in 
     subsection (d)(4), provided through a one-stop delivery 
     system, including facilitating access through the use of 
     technology;
       ``(vi) supporting the provision of core services described 
     in subsection (d)(2) in the one-stop delivery system in the 
     State;
       ``(vii) coordinating with the child welfare system to 
     facilitate services for children in foster care and those who 
     are eligible for assistance under section 477 of the Social 
     Security Act (42 U.S.C. 677);
       ``(viii) activities--

       ``(I) to improve coordination between workforce investment 
     activities carried out within the State involved and economic 
     development activities, and to promote entrepreneurial skills 
     training and microenterprise services;
       ``(II) to improve coordination between employment and 
     training assistance, child support services, and assistance 
     provided by State and local agencies carrying out part D of 
     title IV of the Social Security Act (42 U.S.C. 651 et seq.);
       ``(III) to improve coordination between employment and 
     training assistance and cooperative extension programs 
     carried out by the Department of Agriculture;
       ``(IV) to improve coordination between employment and 
     training assistance and programs carried out in the local 
     area for individuals with disabilities, including programs 
     carried out by State agencies relating to mental retardation 
     and developmental disabilities, Statewide Independent Living 
     Councils established under section 705 of the Rehabilitation 
     Act of 1973 (29 U.S.C. 796d), and centers for independent 
     living defined in section 702 of the Rehabilitation Act of 
     1973 (29 U.S.C. 796a);
       ``(V) to develop and disseminate workforce and labor market 
     information;
       ``(VI) to improve coordination with the corrections system 
     to facilitate provision of training services and employment 
     opportunities that will assist ex-offenders in reentering the 
     workforce; and
       ``(VII) to promote financial literacy, including carrying 
     out activities described in section 129(b)(1)(I);

       ``(ix) conducting--

       ``(I) research; and
       ``(II) demonstration projects; and

       ``(x) adopting, calculating, or commissioning a minimum 
     self-sufficiency standard that specifies the income needs of 
     families, by family size, the number and ages of children in 
     the family, and sub-State geographical considerations.''.
       (2) Required local employment and training activities.--
       (A) Allocated funds.--Section 134(d)(1)(A) (29 U.S.C. 
     2864(d)(1)(A)) is amended--
       (i) in clause (i), by striking ``described in subsection 
     (c)'';
       (ii) in clause (iii), by striking ``and'' at the end;
       (iii) in clause (iv), by striking the period and inserting 
     a semicolon; and
       (iv) by adding at the end the following:
       ``(v) to designate a dedicated business liaison in the 
     local area who may be funded with funds provided under this 
     title or from other sources to establish and develop 
     relationships and networks with large and small employers and 
     their intermediaries; and
       ``(vi) in order to improve service delivery to avoid 
     duplication of services and enhance coordination of services, 
     to require the colocation of employment services provided 
     under the Wagner-Peyser Act (29 U.S.C. 49 et seq.) at the 
     one-stop centers.''.

[[Page 9568]]

       (B) Core services.--Section 134(d)(2) (29 U.S.C. 
     2864(d)(2)) is amended--
       (i) in the matter preceding subparagraph (A), by striking 
     ``paragraph (1)(A)'' and inserting ``paragraph (1)'';
       (ii) in subparagraph (C), by inserting ``(including 
     literacy, numeracy, and English language proficiency)'' after 
     ``skill levels'';
       (iii) by striking subparagraph (D) and inserting the 
     following:
       ``(D) labor exchange services, including--
       ``(i) job search and placement assistance and, in 
     appropriate cases, career counseling, including--

       ``(I) exposure to high wage, high skill jobs; and
       ``(II) nontraditional employment; and

       ``(ii) appropriate recruitment and other business services 
     for all employers, including small employers, in the local 
     area, which may include services described in this 
     subsection, including information and referral to specialized 
     business services not traditionally offered through the one-
     stop delivery system;'';
       (iv) in subparagraph (E)(iii)--

       (I) by inserting ``, career ladders,'' after ``earnings''; 
     and
       (II) by striking ``and'' at the end;

       (v) in subparagraph (F)--

       (I) by striking ``and program cost information''; and
       (II) by striking ``described in section 123'';

       (vi) by striking subparagraph (H) and inserting the 
     following:
       ``(H) provision of accurate information, in formats that 
     are usable and understandable to all one-stop center 
     customers, relating to the availability of supportive 
     services or assistance, including child care, child support, 
     medical or child health assistance under title XIX or XXI of 
     the Social Security Act (42 U.S.C. 1396 et seq. and 1397aa et 
     seq.), benefits under the Food Stamp Act of 1977 (7 U.S.C. 
     2011 et seq.), the earned income tax credit under section 32 
     of the Internal Revenue Code of 1986, and assistance under a 
     State program funded under part A of title IV of the Social 
     Security Act (42 U.S.C. 601 et seq.) and other supportive 
     services and transportation provided through funds made 
     available under such part, available in the local area, and 
     referral to such services or assistance as appropriate;''; 
     and
       (vii) in subparagraph (J), by striking 
     ``for--'' and all that follows through ``(ii) programs'' and 
     inserting ``for programs''.
       (C) Intensive services.--Section 134(d)(3) (29 U.S.C. 
     2864(d)(3)) is amended--
       (i) by striking subparagraph (A) and inserting the 
     following:
       ``(A) In general.--
       ``(i) Eligibility.--Except as provided in clause (ii), 
     funds allocated to a local area for adults under paragraph 
     (2)(A) or (3), as appropriate, of section 133(b), and funds 
     allocated to the local area for dislocated workers under 
     section 133(b)(2)(B), shall be used to provide intensive 
     services to adults and dislocated workers, respectively--

       ``(I) who are unemployed and who, after an interview, 
     evaluation, or assessment, have been determined by a one-stop 
     operator or one-stop partner to be--

       ``(aa) unlikely or unable to obtain employment, that leads 
     to self-sufficiency or wages comparable to or higher than 
     previous employment, through core services described in 
     paragraph (2); and
       ``(bb) in need of intensive services to obtain employment 
     that leads to self-sufficiency or wages comparable to or 
     higher than previous employment; or

       ``(II) who are employed, but who, after an interview, 
     evaluation, or assessment are determined by a one-stop 
     operator or one-stop partner to be in need of intensive 
     services to obtain or retain employment that leads to self-
     sufficiency.

       ``(ii) Special rule.--A new interview, evaluation, or 
     assessment of a participant is not required under clause (i) 
     if the one-stop operator or one-stop partner determines that 
     it is appropriate to use a recent assessment of the 
     participant conducted pursuant to another education or 
     training program.''; and
       (ii) in subparagraph (C)--

       (I) in clause (v), by striking ``for participants seeking 
     training services under paragraph (4)''; and
       (II) by adding at the end the following:

       ``(vii) Internships and work experience.
       ``(viii) Literacy activities relating to basic work 
     readiness.
       ``(ix) Financial literacy services, such as activities 
     described in section 129(b)(1)(I).
       ``(x) Out-of-area job search assistance and relocation 
     assistance.
       ``(xi) English language acquisition and integrated training 
     programs.''.
       (D) Training services.--Section 134(d)(4) (29 U.S.C. 
     2864(d)(4)) is amended--
       (i) by striking subparagraph (A) and inserting the 
     following:
       ``(A) In general.--
       ``(i) Eligibility.--Except as provided in clause (ii), 
     funds allocated to a local area for adults under paragraph 
     (2)(A) or (3), as appropriate, of section 133(b), and funds 
     allocated to the local area for dislocated workers under 
     section 133(b)(2)(B), shall be used to provide training 
     services to adults and dislocated workers, respectively--

       ``(I) who, after an interview, evaluation, or assessment, 
     and case management, have been determined by a one-stop 
     operator or one-stop partner, as appropriate, to--

       ``(aa) be unlikely or unable to obtain or retain 
     employment, that leads to self-sufficiency or wages 
     comparable to or higher than previous employment, through the 
     intensive services described in paragraph (3);
       ``(bb) be in need of training services to obtain or retain 
     employment that leads to self-sufficiency or wages comparable 
     to or higher than previous employment; and
       ``(cc) have the skills and qualifications to successfully 
     participate in the selected program of training services;

       ``(II) who select programs of training services that are 
     directly linked to the employment opportunities in the local 
     area or region involved or in another area to which the 
     adults or dislocated workers are willing to commute or 
     relocate;
       ``(III) who meet the requirements of subparagraph (B); and
       ``(IV) who are determined to be eligible in accordance with 
     the priority system in effect under subparagraph (E).

       ``(ii) Special rule.--A new interview, evaluation, or 
     assessment of a participant is not required under clause (i) 
     if the one-stop operator or one-stop partner determines that 
     it is appropriate to use a recent assessment of the 
     participant conducted pursuant to another education or 
     training program.'';
       (ii) in subparagraph (B)(i), by striking ``Except'' and 
     inserting ``Notwithstanding section 479B of the Higher 
     Education Act of 1965 (20 U.S.C. 1087uu) and except'';
       (iii) in subparagraph (D)--

       (I) in clause (viii), by striking ``and'' after the 
     semicolon;
       (II) in clause (ix), by striking the period and inserting 
     ``; and''; and
       (III) by adding at the end the following:

       ``(x) English language acquisition and integrated training 
     programs.'';
       (iv) in subparagraph (F)--

       (I) in clause (ii), by striking ``referred to in subsection 
     (c), shall make available--'' and all that follows and 
     inserting ``shall make available a list of eligible providers 
     of training services, and accompanying information, in 
     accordance with section 122(d).'';
       (II) in the heading of clause (iii), by striking 
     ``Individual training accounts'' and inserting ``Career 
     scholarship accounts'';
       (III) in clause (iii)--

       (aa) by striking ``identifying information'' and inserting 
     ``accompanying information'';
       (bb) by striking ``clause (ii)(I)'' and inserting ``clause 
     (ii)''; and
       (cc) by striking ``an individual training account'' and 
     inserting ``a career scholarship account''; and

       (IV) by adding at the end the following:

       ``(iv) Coordination.--Each local board may, through one-
     stop centers, coordinate career scholarship accounts with 
     other Federal, State, local, or private job training programs 
     or sources to assist the individual in obtaining training 
     services.''; and
       (v) in subparagraph (G)--

       (I) in the subparagraph heading, by striking ``individual 
     training accounts'' and inserting ``career scholarship 
     accounts'';
       (II) in clause (i), by striking ``individual training 
     accounts'' and inserting ``career scholarship accounts'';
       (III) in clause (ii)--

       (aa) by striking ``an individual training account'' and 
     inserting ``a career scholarship account'';
       (bb) in subclause (II), by striking ``individual training 
     accounts'' and inserting ``career scholarship accounts'';
       (cc) in subclause (II) by striking ``or'' after the 
     semicolon;
       (dd) in subclause (III), by striking ``special participant 
     populations that face multiple barriers to employment'' and 
     inserting ``hard-to-serve populations'';
       (ee) in subclause (III), by striking the period and 
     inserting '``; or''; and
       (ff) by adding at the end the following:

       ``(IV) the local board determines that it would be most 
     appropriate to award a contract to an institution of higher 
     education in order to facilitate the training of multiple 
     individuals in high-demand occupations, if such contract does 
     not limit customer choice.''; and
       (IV) in clause (iv)--

       (aa) by redesignating subclause (IV) as subclause (V); and
       (bb) by inserting after subclause (III) the following:

       ``(IV) Individuals with disabilities.''.

       (3) Permissible activities.--Section 134(e) (29 U.S.C. 
     2864(e)) is amended--
       (A) by striking the matter preceding paragraph (2) and 
     inserting the following:
       ``(e) Permissible Local Employment and Training 
     Activities.--
       ``(1) In general.--
       ``(A) Activities.--Funds allocated to a local area for 
     adults under paragraph (2)(A) or (3), as appropriate, of 
     section 133(b), and funds allocated to the local area for 
     dislocated workers under section 133(b)(2)(B), may be used to 
     provide, through the one-stop delivery system involved--
       ``(i) customized screening and referral of qualified 
     participants in training services described in subsection 
     (d)(4) to employment;
       ``(ii) customized employment-related services to employers 
     on a fee-for-service basis;
       ``(iii) customer support to enable members of hard-to-serve 
     populations, including individuals with disabilities, to 
     navigate among multiple services and activities for such 
     populations;

[[Page 9569]]

       ``(iv) technical assistance and capacity building for 
     serving individuals with disabilities in local areas, for 
     one-stop operators, one-stop partners, and eligible 
     providers, including the development and training of staff, 
     the provision of outreach, intake, assessments, and service 
     delivery, and the development of performance measures;
       ``(v) employment and training assistance provided in 
     coordination with child support enforcement activities of the 
     State and local agencies carrying out part D of title IV of 
     the Social Security Act (42 U.S.C. 651 et seq.);
       ``(vi) activities to improve coordination between 
     employment and training assistance, child support services, 
     and assistance provided by State and local agencies carrying 
     out part D of title IV of the Social Security Act (42 U.S.C. 
     651 et seq.);
       ``(vii) activities to improve coordination between 
     employment and training assistance and cooperative extension 
     programs carried out by the Department of Agriculture;
       ``(viii) activities to facilitate remote access to services 
     provided through a one-stop delivery system, including 
     facilitating access through the use of technology;
       ``(ix) activities--

       ``(I) to improve coordination between workforce investment 
     activities carried out within the local area involved and 
     economic development activities, and to promote 
     entrepreneurial skills training and microenterprise services; 
     and
       ``(II) to improve services and linkages between the local 
     workforce investment system including the local one-stop 
     delivery system, and all employers, including small employers 
     in the local area, through services described in this 
     section, including subparagraph (B);

       ``(x) training programs for displaced homemakers and for 
     individuals training for nontraditional occupations, in 
     conjunction with programs operated in the local area;
       ``(xi) using a portion of the funds allocated under section 
     133(b), activities to carry out business services and 
     strategies that meet the workforce investment needs of local 
     area employers, as determined by the local board, consistent 
     with the local plan under section 118, which services--

       ``(I) may be provided through effective business 
     intermediaries working in conjunction with the local board, 
     and may also be provided on a fee-for-service basis or 
     through the leveraging of economic development and other 
     resources as determined appropriate by the local board; and
       ``(II) may include--

       ``(aa) identifying and disseminating to business, 
     educators, and job seekers, information related to the 
     workforce, economic and community development needs, and 
     opportunities of the local economy;
       ``(bb) development and delivery of innovative workforce 
     investment services and strategies for area businesses, which 
     may include sectoral, industry cluster, regional skills 
     alliances, career ladder, skills upgrading, skill standard 
     development and certification, apprenticeship, and other 
     effective initiatives for meeting the workforce investment 
     needs of area employers and workers;
       ``(cc) participation in seminars and classes offered in 
     partnership with relevant organizations focusing on the 
     workforce-related needs of area employers and job seekers;
       ``(dd) training consulting, needs analysis, and brokering 
     services for area businesses, including the organization and 
     aggregation of training (which may be paid for with funds 
     other than those provided under this title), for individual 
     employers and coalitions of employers with similar interests, 
     products, or workforce needs;
       ``(ee) assistance to area employers in the aversion of 
     layoffs and in managing reductions in force in coordination 
     with rapid response activities;
       ``(ff) the marketing of business services offered under 
     this title, to appropriate area employers, including small 
     and mid-sized employers;
       ``(gg) information referral on concerns affecting local 
     employers; and
       ``(hh) other business services and strategies designed to 
     better engage employers in workforce investment activities 
     and to make the workforce investment system more relevant to 
     the workforce investment needs of area businesses, as 
     determined by the local board to be consistent with the 
     objectives of this title;
       ``(xii) activities to adjust the self-sufficiency standards 
     for local factors, or activities to adopt, calculate, or 
     commission a self-sufficiency standard that specifies the 
     income needs of families, by family size, the number and ages 
     of children in the family, and sub-State geographical 
     considerations; and
       ``(xiii) improved coordination between employment and 
     training assistance and programs carried out in the local 
     area for individuals with disabilities, including programs 
     carried out by State agencies relating to mental retardation 
     and developmental disabilities, Statewide Independent Living 
     Councils established under section 705 of the Rehabilitation 
     Act of 1973 (29 U.S.C. 796d), and centers for independent 
     living defined in section 702 of the Rehabilitation Act of 
     1973 (29 U.S.C. 796a).
       ``(B) Work support activities for low-wage workers.--
       ``(i) In general.--Funds allocated to a local area for 
     adults under paragraph (2)(A) or (3), as appropriate, of 
     section 133(b), and funds allocated to the local area for 
     dislocated workers under section 133(b)(2)(B), may be used to 
     provide, through the one-stop delivery system involved, work 
     support activities designed to assist low-wage workers in 
     retaining and enhancing employment. The one-stop partners 
     shall coordinate the appropriate programs and resources of 
     the partners with the activities and resources provided under 
     this subparagraph.
       ``(ii) Activities.--The activities described in clause (i) 
     may include the provision of activities described in this 
     section through the one-stop delivery system in a manner that 
     enhances the opportunities of such workers to participate in 
     the activities, such as the provision of activities described 
     in this section during nontraditional hours and the provision 
     of onsite child care while such activities are being 
     provided.'';
       (B) in paragraph (2), by striking the matter preceding 
     subparagraph (A) and inserting the following:
       ``(2) Supportive services.--Funds allocated to a local area 
     for adults under paragraph (2)(A) or (3), as appropriate, of 
     section 133(b), and funds allocated to the local area for 
     dislocated workers under section 133(b)(2)(B), may be used to 
     provide supportive services to adults and dislocated workers, 
     respectively--''; and
       (C) by adding at the end the following:
       ``(4) Incumbent worker training programs.--
       ``(A) In general.--The local board may use up to 10 percent 
     of the funds allocated to the local area involved under 
     section 133(b) to pay for the Federal share of the cost of 
     providing training through an incumbent worker training 
     program carried out in accordance with this paragraph. The 
     Governor or State board may make recommendations to the local 
     board regarding incumbent worker training with statewide 
     impact.
       ``(B) Training activities.--The training program for 
     incumbent workers carried out under this paragraph shall be 
     carried out by the local board in conjunction with the 
     employers or groups of employers of such workers for the 
     purpose of assisting such workers in obtaining the skills 
     necessary to retain employment or avert layoffs.
       ``(C) Employer share required.--
       ``(i) In general.--Employers participating in the program 
     carried out under this paragraph shall be required to pay the 
     non-Federal share of the costs of providing the training to 
     incumbent workers of the employers. The local board shall 
     establish the non-Federal share of such costs, which may 
     include in-kind contributions. The non-Federal share shall 
     not be less than--

       ``(I) 10 percent of the costs, for employers with 50 or 
     fewer employees;
       ``(II) 25 percent of the costs, for employers with more 
     than 50 employees but fewer than 100 employees; and
       ``(III) 50 percent of the costs, for employers with 100 or 
     more employees.

       ``(ii) Calculation of employer share.--The non-Federal 
     share paid by such an employer may include the amount of the 
     wages paid by the employer to a worker while the worker is 
     attending a training program under this paragraph.''.

     SEC. 122. PERFORMANCE ACCOUNTABILITY SYSTEM.

       (a) State Performance Measures.--
       (1) Indicators of performance.--Section 136(b)(2)(A) (29 
     U.S.C. 2871(b)(2)(A)) is amended--
       (A) in clause (i)--
       (i) in the matter preceding subclause (I), by striking 
     ``and (for participants who are eligible youth age 19 through 
     21) for youth activities authorized under section 129'';
       (ii) by striking subclause (III) and inserting the 
     following:

       ``(III) increases in earnings from unsubsidized employment; 
     and''; and

       (iii) in subclause (IV), by striking ``, or by 
     participants'' and all that follows through ``unsubsidized 
     employment''; and
       (B) by striking clause (ii) and inserting the following:
       ``(ii) Core indicators for eligible youth.--The core 
     indicators of performance for youth activities authorized 
     under section 129 shall consist of--

       ``(I) entry into employment, education or advanced 
     training, or military service;
       ``(II) school retention, and attainment of secondary school 
     diplomas or their recognized equivalents and of postsecondary 
     certificates; and
       ``(III) literacy or numeracy gains.''.

       (2) Additional indicators.--Section 136(b)(2)(C) (29 U.S.C. 
     2871(b)(2)(C)) is amended to read as follows:
       ``(C) Additional indicators.--A State may identify in the 
     State plan additional indicators for workforce investment 
     activities under this subtitle, including indicators 
     identified in collaboration with State business and industry 
     associations, with employee representatives where applicable, 
     and with local boards, to measure the performance of the 
     workforce investment system in serving the workforce needs of 
     business and industry in the State.''.
       (3) Levels of performance.--Section 136(b)(3)(A) (29 U.S.C. 
     2871(b)(3)(A)) is amended--

[[Page 9570]]

       (A) in clause (iii)--
       (i) in the heading, by striking ``for first 3 years'';
       (ii) by striking ``and the customer satisfaction indicator 
     of performance, for the first 3'' and inserting ``described 
     in clauses (i) and (ii) of paragraph (2)(A) and the customer 
     satisfaction indicator of performance, for the first 2''; and
       (iii) by inserting at the end the following: ``Agreements 
     on levels of performance for each of the core indicators of 
     performance for the third and fourth program years covered by 
     the State plan shall be reached prior to the beginning of the 
     third program year covered by the State plan, and 
     incorporated as a modification to the State plan.'';
       (B) in clause (iv)--
       (i) in the matter preceding subclause (I), by striking ``or 
     (v)'';
       (ii) in subclause (II)--

       (I) by striking ``taking into account'' and inserting ``and 
     shall ensure that the levels involved are adjusted, using 
     objective statistical methods, based on'';
       (II) by inserting ``(such as differences in unemployment 
     rates and job losses or gains in particular industries)'' 
     after ``economic conditions'';
       (III) by inserting ``(such as indicators of poor work 
     history, lack of work experience, lack of educational or 
     occupational skills attainment, dislocation from high-wage 
     and benefit employment, low levels of literacy or English 
     proficiency, disability status, homelessness, ex-offender 
     status, and welfare dependency)'' after ``program''; and
       (IV) by striking ``and'' at the end;

       (iii) in subclause (III), by striking the period and 
     inserting ``; and''; and
       (iv) by adding at the end the following:

       ``(IV) the extent to which the levels involved will assist 
     the State in meeting the national goals described in clause 
     (v).'';

       (C) by striking clause (v) and inserting the following:
       ``(v) Establishment of national goals.--In order to promote 
     enhanced performance outcomes on the performance measures and 
     to facilitate the process of reaching agreements with the 
     States under clause (iii) and to measure systemwide 
     performance for the one-stop delivery systems of the States, 
     the Secretary shall establish long-term national goals for 
     the adjusted levels of performance for that systemwide 
     performance to be achieved by the programs assisted under 
     chapters 4 and 5 on the core indicators of performance 
     described in subparagraphs (A) and (B) of subsection (b)(2). 
     Such goals shall be established in accordance with the 
     Government Performance and Results Act of 1993 in 
     consultation with the States and other appropriate 
     parties.''; and
       (D) in clause (vi)--
       (i) by striking ``or (v)''; and
       (ii) by striking ``with the representatives described in 
     subsection (i)'' and inserting ``with the States and other 
     interested parties''.
       (b) Local Performance Measures.--Section 136(c)(3) (29 
     U.S.C. 2871(c)(3))--
       (1) by striking ``shall take into account'' and inserting 
     ``shall ensure that the levels involved are adjusted, using 
     objective statistical methods, based on'';
       (2) by inserting ``(characteristics such as unemployment 
     rates and job losses or gains in particular industries)'' 
     after ``economic''; and
       (3) by inserting ``(characteristics such as indicators of 
     poor work history, lack of work experience, lack of 
     educational and occupational skills attainment, dislocation 
     from high-wage and benefit employment, low levels of literacy 
     or English proficiency, disability status, homelessness, ex-
     offender status, and welfare dependency)'' after 
     ``demographic''.
       (c) Report.--Section 136(d) (29 U.S.C. 2871(d)) is 
     amended--
       (1) in paragraph (1), by adding at the end the following: 
     ``In the case of a State or local area that chooses to expend 
     funds for activities under subsection (a)(3)(A)(i) or 
     (e)(1)(A)(xi), respectively, of section 134, the report also 
     shall include the amount of such funds so expended and the 
     percentage that such funds are of the funds available for 
     activities under section 134.'';
       (2) in paragraph (2)--
       (A) in subparagraph (E)--
       (i) by striking ``(excluding participants who received only 
     self-service and informational activities)''; and
       (ii) by striking ``and'' after the semicolon;
       (B) in subparagraph (F)--
       (i) by inserting ``noncustodial parents with child support 
     obligations, homeless individuals,'' after ``displaced 
     homemakers,''; and
       (ii) by striking the period and inserting a semicolon; and
       (C) by adding at the end the following:
       ``(G) the number of participants who have received 
     services, other than followup services, authorized under this 
     title;
       ``(H) the number of participants who have received 
     services, other than followup services, authorized under this 
     title, in the form of core services described in section 
     134(d)(2), intensive services described in section 134(d)(3), 
     and training services described in section 134(d)(4), 
     respectively;
       ``(I) the number of participants who have received followup 
     services authorized under this title;
       ``(J) the cost per participant for services authorized 
     under this title; and
       ``(K) the amount of adult and dislocated worker funds spent 
     on--
       ``(i) core, intensive, and training services, respectively; 
     and
       ``(ii) services provided under subsection (a)(3)(A)(i) or 
     (e)(1)(A)(xi) of section 134, if applicable.''; and
       (3) by adding at the end the following:
       ``(4) Data validation.--In preparing the reports described 
     in this subsection, the States shall establish procedures, 
     consistent with guidelines issued by the Secretary, to ensure 
     that the information contained in the reports is valid and 
     reliable.''.
       (d) Evaluation of State Programs.--Section 136(e)(3) is 
     amended by inserting ``, including information on promoting 
     self-sufficiency and comparable pay between men and women'' 
     after ``employers''.
       (e) Sanctions for State.--Section 136(g) is amended--
       (1) in paragraph (1)(B), by striking ``If such failure 
     continues for a second consecutive year'' and inserting ``If 
     a State performs at less than 80 percent of the adjusted 
     level of performance for core indicators of performance 
     described in subsection (b)(2)(A) for 2 consecutive years''; 
     and
       (2) in paragraph (2), by striking ``section 503'' and 
     inserting ``subsection (i)(1)''.
       (f) Sanctions for Local Area.--Section 136(h)(2)(A) (29 
     U.S.C. 2871(h)(2)(A)) is amended--
       (1) in the matter preceding clause (i), by striking ``If 
     such failure continues for a second consecutive year'' and 
     inserting ``If a local area performs at less than 80 percent 
     of the adjusted level of performance for core indicators of 
     performance described in subsection (b)(2)(A) for 2 
     consecutive years'';
       (2) in clause (ii), by striking ``or'' after the semicolon;
       (3) by redesignating clause (iii) as clause (iv); and
       (4) by inserting after clause (ii) the following:
       ``(iii) redesignate the local area in accordance with 
     section 116(b)(2); or''.
       (g) Incentive Grants.--Section 136(i) (29 U.S.C. 2871(i)) 
     is amended to read as follows:
       ``(i) Incentive Grants for Local Areas.--
       ``(1) In general.--From funds reserved under sections 
     128(a) and 133(a)(1), the Governor involved shall award 
     incentive grants to local areas for performance described in 
     paragraph (2) in carrying out programs under chapters 4 and 
     5.
       ``(2) Basis.--The Governor shall award the grants on the 
     basis that the local areas--
       ``(A) have exceeded the performance measures established 
     under subsection (c)(2) relating to indicators described in 
     subsection (b)(3)(A)(iii); or
       ``(B) have--
       ``(i) met the performance measures established under 
     subsection (c)(2) relating to indicators described in 
     subsection (b)(3)(A)(iii); and
       ``(ii) demonstrated--

       ``(I) exemplary coordination of Federal workforce and 
     education programs, statewide economic development, or 
     business needs;
       ``(II) exemplary performance in the State in serving hard-
     to-serve populations; or
       ``(III) effective--

       ``(aa) coordination of multiple systems into a 
     comprehensive workforce investment system, including 
     coordination of employment services under the Wagner-Peyser 
     Act (29 U.S.C. 49 et seq.) and core activities under this 
     title as well as one-stop partner programs described in 
     section 121;
       ``(bb) expansion of access to training, including through 
     increased leveraging of resources other than those funded 
     through programs under this title;
       ``(cc) implementation of coordination activities through 
     agreements with relevant regional or local agencies and 
     offices, including those responsible for programs under the 
     Adult Education and Family Literacy Act (20 U.S.C. 9201 et 
     seq.) and the Rehabilitation Act of 1973 (29 U.S.C. 701 et 
     seq.);
       ``(dd) regional coordination with other local workforce 
     investment boards or areas;
       ``(ee) alignment of management information systems to 
     integrate participant information across programs; or
       ``(ff) integration of performance information systems and 
     common measures for accountability across workforce and 
     education programs.
       ``(3) Use of funds.--The funds awarded to a local area 
     under this subsection may be used to carry out activities 
     authorized for local areas and such innovative projects or 
     programs that increase coordination and enhance service to 
     program participants, particularly hard-to-serve populations, 
     as may be approved by the Governor, including--
       ``(A) activities that support business needs, especially 
     for incumbent workers and enhancing opportunities for 
     retention and advancement;
       ``(B) activities that support linkages with secondary, 
     postsecondary, or career and technical education programs, 
     including activities under the Carl D. Perkins Vocational and 
     Technical Education Act of 1998 (20 U.S.C. 2301 et seq.), the 
     Adult Education and Family Literacy Act (20 U.S.C. 9201 et 
     seq.), and the Rehabilitation Act of 1973 (29 U.S.C. 701 et 
     seq.);

[[Page 9571]]

       ``(C) activities that support regional economic development 
     plans that support high-wage, high-skill, or high-demand 
     occupations leading to self-sufficiency;
       ``(D) activities that coordinate workforce investment 
     programs with other Federal and State programs related to the 
     activities under this Act;
       ``(E) activities that support the development of an 
     integrated performance information system that includes 
     common measures;
       ``(F) activities that align management information systems 
     with integrated performance information across education and 
     workforce programs;
       ``(G) activities that support activities to improve 
     performance and program coordination with other training 
     providers; or
       ``(H) activities that leverage additional training 
     resources for adults and youth.
       ``(4) Technical assistance.--The Governor shall reserve 4 
     percent of the funds available for grants under this 
     subsection to provide technical assistance to local areas to 
     replicate best practices or to develop integrated performance 
     information systems and strengthen coordination with 
     education and regional economic development.''.
       (h) Use of Core Measures in Other Department of Labor 
     Programs.--Section 136 (29 U.S.C. 2871) is amended by adding 
     at the end the following:
       ``(j) Use of Core Indicators for Other Programs.--In 
     addition to the programs carried out under chapters 4 and 5, 
     and consistent with the requirements of the applicable 
     authorizing laws, the Secretary shall use the indicators of 
     performance described in subparagraphs (A) and (B) of 
     subsection (b)(2) to assess the effectiveness of the programs 
     described in clauses (i), (ii), and (vi) of section 
     121(b)(1)(B) that are carried out by the Secretary.''.
       (i) Previous Definitions of Core Indicators.--Section 502 
     (29 U.S.C. 9272) is repealed.

     SEC. 123. AUTHORIZATION OF APPROPRIATIONS.

       (a) Youth Activities.--Section 137(a) (29 U.S.C. 2872(a)) 
     is amended by striking ``such sums as may be necessary for 
     each of fiscal years 1999 through 2003'' and inserting ``such 
     sums as may be necessary for each of fiscal years 2006 
     through 2011''.
       (b) Adult Employment and Training Activities.--Section 
     137(b) (29 U.S.C. 2872(b)) is amended by striking ``such sums 
     as may be necessary for each of fiscal years 1999 through 
     2003'' and inserting ``such sums as may be necessary for each 
     of fiscal years 2006 through 2011''.
       (c) Dislocated Worker Employment and Training Activities.--
     Section 137(c) (29 U.S.C. 2872(c)) is amended by striking 
     ``such sums as may be necessary for each of fiscal years 1999 
     through 2003'' and inserting ``such sums as may be necessary 
     for each of fiscal years 2006 through 2011''.

                         Subtitle C--Job Corps

     SEC. 131. JOB CORPS.

       (a) Eligibility.--Section 144(3) (29 U.S.C. 2884(3)) is 
     amended by adding at the end the following:
       ``(F) A child eligible for assistance under section 477 of 
     the Social Security Act (42 U.S.C. 677).''.
       (b) Implementation of Standards and Procedures.--Section 
     145(a)(3) (29 U.S.C. 2885(a)(3)) is amended--
       (1) in subparagraph (B), by striking ``and'' after the 
     semicolon;
       (2) in subparagraph (C), by striking the period and 
     inserting ``; and''; and
       (3) by adding at the end the following:
       ``(D) child welfare agencies that are responsible for 
     children in foster care and children eligible for assistance 
     under section 477 of the Social Security Act (42 U.S.C. 
     677).''.
       (c) Industry Councils.--Section 154(b) (29 U.S.C. 2894(b)) 
     is amended--
       (1) in paragraph (1)(A), by striking ``local and distant''; 
     and
       (2) by adding at the end the following:
       ``(3) Employers outside of local area.--The industry 
     council may include, or otherwise provide for consultation 
     with, employers from outside the local area who are likely to 
     hire a significant number of enrollees from the Job Corps 
     center.
       ``(4) Special rule for single local area states.--In the 
     case of a single local area State designated under section 
     116(b), the industry council shall include a representative 
     of the State Board.''.
       (d) Indicators of Performance.--Section 159 (29 U.S.C. 
     2899) is amended--
       (1) in subsection (c)--
       (A) by striking paragraph (1) and inserting the following:
       ``(1) Performance indicators.--The Secretary shall annually 
     establish expected levels of performance for Job Corps 
     centers and the Job Corps program relating to each of the 
     core indicators of performance for youth activities 
     identified in section 136(b)(2)(A)(ii).'';
       (B) in paragraph (2), by striking ``measures'' each place 
     it appears and inserting ``indicators''; and
       (C) in paragraph (3)--
       (i) in the first sentence, by striking ``core performance 
     measures, as compared to the expected performance level for 
     each performance measure'' and inserting ``performance 
     indicators described in paragraph (1), as compared to the 
     expected level of performance established under paragraph (1) 
     for each performance measure''; and
       (ii) in the second sentence, by striking ``measures'' each 
     place it appears and inserting ``indicators''; and
       (2) in subsection (f)(2), in the first sentence, by 
     striking ``core performance measures'' and inserting 
     ``indicators of performance''.
       (e) Authorization of Appropriations.--Section 161 (29 
     U.S.C. 2901) is amended by striking ``1999 through 2003'' and 
     inserting ``2006 through 2011''.

                     Subtitle D--National Programs

     SEC. 141. NATIVE AMERICAN PROGRAMS.

       (a) Advisory Council.--Section 166(h)(4)(C) (29 U.S.C. 
     2911(h)(4)(C)) is amended to read as follows:
       ``(C) Duties.--The Council shall advise the Secretary on 
     the operation and administration of the programs assisted 
     under this section, including the selection of the individual 
     appointed as head of the unit established under paragraph 
     (1).''.
       (b) Assistance to Unique Populations in Alaska and 
     Hawaii.--Section 166(j) (29 U.S.C. 2911(j)) is amended to 
     read as follows:
       ``(j) Assistance to Unique Populations in Alaska and 
     Hawaii.--
       ``(1) In general.--Notwithstanding any other provision of 
     law, the Secretary is authorized to provide assistance to the 
     Cook Inlet Tribal Council, Incorporated, and the University 
     of Hawaii at Maui, for the unique populations who reside in 
     Alaska or Hawaii, to improve job training and workforce 
     investment activities.
       ``(2) Authorization of appropriations.--There are 
     authorized to be appropriated to carry out this subsection 
     such sums as may be necessary for fiscal year 2006.''.
       (c) Performance Indicators.--Section 166 (29 U.S.C. 2911) 
     is amended by adding at the end the following:
       ``(k) Performance Indicators.--
       ``(1) Development of indicators.--The Secretary, in 
     consultation with the Native American Employment and Training 
     Council, shall develop a set of performance indicators and 
     standards which shall be applicable to programs under this 
     section.
       ``(2) Special considerations.--Such performance indicators 
     and standards shall take into account--
       ``(A) the purpose of this section as described in 
     subsection (a)(1);
       ``(B) the needs of the groups served by this section, 
     including the differences in needs among such groups in 
     various geographic service areas; and
       ``(C) the economic circumstances of the communities served, 
     including differences in circumstances among various 
     geographic service areas.''.

     SEC. 142. MIGRANT AND SEASONAL FARMWORKER PROGRAMS.

       Section 167 (29 U.S.C. 2912) is amended--
       (1) in subsection (a), by striking ``2'' and inserting ``2 
     to 4'';
       (2) in subsection (b), by inserting ``and deliver'' after 
     ``administer'';
       (3) in subsection (c)--
       (A) in paragraph (1), by striking ``2-year'' and inserting 
     ``4-year'';
       (B) in paragraph (2)--
       (i) in subparagraph (A)--

       (I) by inserting ``describe the population to be served 
     and'' before ``identify''; and
       (II) by inserting ``, including upgraded employment in 
     agriculture'' before the semicolon;

       (ii) in subparagraph (B), by striking ``and'' at the end;
       (iii) in subparagraph (C), by striking the period and 
     inserting a semicolon; and
       (iv) by adding at the end the following:
       ``(D) describe the availability and accessibility of local 
     resources such as supportive services, services provided 
     through one-stop delivery systems, and education and training 
     services, and how the resources can be made available to the 
     population to be served; and
       ``(E) describe the plan for providing services under this 
     section, including strategies and systems for outreach, case 
     management, assessment, and delivery through one-stop 
     delivery systems.''; and
       (C) by striking paragraph (4) and inserting the following:
       ``(4) Competition.--The competition for grants made and 
     contracts entered into under this section shall be conducted 
     every 2 to 4 years.'';
       (4) in subsection (d), by striking ``include'' and all that 
     follows and inserting ``include outreach, employment, 
     training, educational assistance, literary assistance, 
     English language and literacy instruction, pesticide and 
     worker safety training, housing (including permanent 
     housing), supportive services, school dropout prevention 
     activities, followup services for those individuals placed in 
     employment, self-employment and related business or micro-
     enterprise development or education as needed by eligible 
     individuals and as identified pursuant to the plan required 
     by subsection (c), customized career and technical education 
     in occupations that will lead to higher wages, enhanced 
     benefits, and long-term employment in agriculture or another 
     area, and technical assistance to improve coordination of 
     services and implement best practices relating to service 
     delivery through one-stop delivery systems.'';
       (5) in subsection (f), by striking ``take into account the 
     economic circumstances and demographics of eligible migrant 
     and seasonal farmworkers.'' and inserting ``are adjusted

[[Page 9572]]

     based on the economic and demographic barriers to employment 
     of eligible migrant and seasonal farmworkers.'';
       (6) in subsection (g), by striking ``(enacted by the Single 
     Audit Act of 1984)'';
       (7) in subsection (h)--
       (A) by striking paragraph (1) and inserting the following:
       ``(1) Dependent.--The term `dependent', used with respect 
     to an eligible migrant or seasonal farmworker, means an 
     individual who--
       ``(A) was claimed as a dependent on the farmworker's 
     Federal income tax return for the previous year;
       ``(B) is the spouse of the farmworker; or
       ``(C) is able to establish--
       ``(i) a relationship as the farmworker's--

       ``(I) biological or legally adopted child, grandchild, or 
     great-grandchild;
       ``(II) foster child;
       ``(III) stepchild;
       ``(IV) brother, sister, half-brother, half-sister, 
     stepbrother, or stepsister;
       ``(V) parent, grandparent, or other direct ancestor (but 
     not foster parent);
       ``(VI) stepfather or stepmother;
       ``(VII) uncle or aunt;
       ``(VIII) niece or nephew; or
       ``(IX) father-in-law, mother-in-law, son-in-law, daughter-
     in-law, brother-in-law, or sister-in-law; and

       ``(ii) the receipt of over half of the individual's total 
     support from the farmworker's family during the eligibility 
     determination period for the farmworker.''; and
       (B) in paragraph (4)(A)--
       (i) by striking ``disadvantaged person'' and inserting 
     ``low-income individual''; and
       (ii) by inserting ``and who faces multiple barriers to 
     self-sufficiency'' before the semicolon;
       (8) by redesignating subsection (h) as subsection (i); and
       (9) by inserting before subsection (i) the following:
       ``(h) Funding Allocation.--From the funds appropriated and 
     made available to carry out this section, the Secretary shall 
     reserve not more than 1 percent for discretionary purposes, 
     such as providing technical assistance to eligible 
     entities.''

     SEC. 143. VETERANS' WORKFORCE INVESTMENT PROGRAMS.

       Section 168(a)(3) (29 U.S.C. 2913(a)(3)) is amended--
       (1) in subparagraph (A), by inserting ``, including 
     services provided by one-stop operators and one-stop 
     partners'' before the semicolon; and
       (2) in subparagraph (C), by striking ``section 134(c)'' and 
     inserting ``section 121(e)''.

     SEC. 144. YOUTH CHALLENGE GRANTS.

       Section 169 (29 U.S.C. 2914) is amended to read as follows:

     ``SEC. 169. YOUTH CHALLENGE GRANTS.

       ``(a) In General.--Of the amounts reserved by the Secretary 
     under section 127(b)(1)(A) for a fiscal year--
       ``(1) the Secretary shall use not less than 80 percent to 
     award competitive grants under subsection (b); and
       ``(2) the Secretary may use not more than 20 percent to 
     award competitive grants under subsection (c).
       ``(b) Competitive Grants to States and Local Areas.--
       ``(1) Establishment.--From the funds described in 
     subsection (a)(1), the Secretary shall award competitive 
     grants to eligible entities to carry out activities 
     authorized under this subsection to assist eligible youth in 
     acquiring the skills, credentials, and employment experience 
     necessary to achieve the performance outcomes for youth 
     described in section 136.
       ``(2) Eligible entity.--In this subsection, the term 
     `eligible entity' means--
       ``(A) a State or consortium of States;
       ``(B) a local board or consortium of local boards;
       ``(C) a recipient of a grant under section 166 (relating to 
     Native American programs); or
       ``(D) a public or private entity (including a consortium of 
     such entities) with expertise in the provision of youth 
     activities, applying in partnership with a local board or 
     consortium of local boards.
       ``(3) Applications.--To be eligible to receive a grant 
     under this subsection, an eligible entity shall submit an 
     application to the Secretary at such time, in such manner, 
     and containing such information as the Secretary may require, 
     including--
       ``(A) a description of the activities the eligible entity 
     will provide to eligible youth under this subsection, and how 
     the eligible entity will collaborate with State and local 
     workforce investment systems established under this title in 
     the provision of such activities;
       ``(B) a description of the programs of demonstrated 
     effectiveness on which the provision of the activities under 
     subparagraph (A) are based, and a description of how such 
     activities will expand the base of knowledge relating to the 
     provision of activities for youth;
       ``(C) a description of the State, local, and private 
     resources that will be leveraged to provide the activities 
     described under subparagraph (A) in addition to funds 
     provided under this subsection, and a description of the 
     extent of the involvement of employers in the activities;
       ``(D) the levels of performance the eligible entity expects 
     to achieve with respect to the indicators of performance for 
     youth specified in section 136(b)(2)(A)(ii); and
       ``(E) an assurance that the State board of each State in 
     which the proposed activities are to be carried out had the 
     opportunity to review the application, and including the 
     comments, if any, of the affected State boards on the 
     application, except that this subparagraph shall not apply to 
     an eligible entity described in paragraph (2)(C).
       ``(4) Factors for award.--
       ``(A) In general.--In awarding grants under this subsection 
     the Secretary shall consider--
       ``(i) the quality of the proposed activities;
       ``(ii) the goals to be achieved;
       ``(iii) the likelihood of successful implementation;
       ``(iv) the extent to which the proposed activities are 
     based on proven strategies or the extent to which the 
     proposed activities will expand the base of knowledge 
     relating to the provision of activities for eligible youth;
       ``(v) the extent of collaboration with the State and local 
     workforce investment systems in carrying out the proposed 
     activities;
       ``(vi) the extent of employer involvement in the proposed 
     activities;
       ``(vii) whether there are other Federal and non-Federal 
     funds available for similar activities to the proposed 
     activities, and the additional State, local, and private 
     resources that will be provided to carry out the proposed 
     activities;
       ``(viii) the quality of the proposed activities in meeting 
     the needs of the eligible youth to be served; and
       ``(ix) the extent to which the proposed activities will 
     expand on services provided under section 127.
       ``(B) Equitable geographic distribution.--In awarding 
     grants under this subsection the Secretary shall ensure an 
     equitable distribution of such grants across geographically 
     diverse areas.
       ``(5) Use of funds.--
       ``(A) In general.--An eligible entity that receives a grant 
     under this subsection shall use the grant funds to carry out 
     activities that are designed to assist youth in acquiring the 
     skills, credentials, and employment experience that are 
     necessary to succeed in the labor market, including the 
     activities identified in section 129.
       ``(B) Activities.--The activities carried out pursuant to 
     subparagraph (A) may include the following:
       ``(i) Training and internships for out-of-school youth in 
     sectors of the economy experiencing, or projected to 
     experience, high growth.
       ``(ii) Dropout prevention activities for in-school youth.
       ``(iii) Activities designed to assist special youth 
     populations, such as court-involved youth and youth with 
     disabilities.
       ``(iv) Activities combining remediation of academic skills, 
     work readiness training, and work experience, and including 
     linkages to postsecondary education, apprenticeships, and 
     career-ladder employment.
       ``(v) Activities, including work experience, paid 
     internships, and entrepreneurial training, in areas where 
     there is a migration of youth out of the areas.
       ``(C) Participant eligibility.--Youth who are 14 years of 
     age through 21 years of age, as of the time the eligibility 
     determination is made, may be eligible to participate in 
     activities carried out under this subsection.
       ``(6) Grant period.--The Secretary shall make a grant under 
     this subsection for a period of 2 years and may renew the 
     grant, if the eligible entity has performed successfully, for 
     a period of not more than 3 succeeding years.
       ``(7) Matching funds required.--The Secretary shall require 
     that an eligible entity that receives a grant under this 
     subsection provide non-Federal matching funds in an amount to 
     be determined by the Secretary that is not less than 10 
     percent of the cost of activities carried out under the 
     grant. The Secretary may require that such non-Federal 
     matching funds be provided in cash resources, noncash 
     resources, or a combination of cash and noncash resources.
       ``(8) Evaluation.--The Secretary shall reserve not more 
     than 3 percent of the funds described in subsection (a)(1) to 
     provide technical assistance to, and conduct evaluations of 
     (using appropriate techniques as described in section 
     172(c)), the projects funded under this subsection.
       ``(c) Competitive First Jobs for Youth.--
       ``(1) Eligible entity.--In this subsection, the term 
     `eligible entity' means a consortium that--
       ``(A) shall include--
       ``(i)(I) a State board; or
       ``(II) a local board; and
       ``(ii) a consortium of businesses, including small 
     businesses; and
       ``(B) may include 1 or more--
       ``(i) local educational agencies;
       ``(ii) institutions of higher education;
       ``(iii) business intermediaries;
       ``(iv) community-based organizations; or
       ``(v) apprenticeship programs.
       ``(2) Authorization.--From the funds described in 
     subsection (a)(2), the Secretary may award grants to eligible 
     entities to provide activities that will assist youth in 
     preparing for, entering, and retaining employment.

[[Page 9573]]

       ``(3) Applications.--To be eligible to receive a grant 
     under this subsection, an eligible entity shall submit an 
     application to the Secretary at such time, in such manner, 
     and containing such information as the Secretary may require, 
     including--
       ``(A) a description of the area to be served, including 
     information demonstrating that the area has--
       ``(i) high unemployment among individuals ages 16 through 
     21;
       ``(ii) high unemployment among youth who are individuals 
     with disabilities; or
       ``(iii) high job loss;
       ``(B) a description of the proposed program, including 
     activities, compensation, and expected outcomes;
       ``(C) an assurance that the participating employers in the 
     proposed program are located in the local area to be served, 
     and a demonstration of the commitment of the participating 
     employers to hire individuals who--
       ``(i) have successfully completed the program; or
       ``(ii) continue to work in the program;
       ``(D) demographic information about the targeted 
     populations to be served by the proposed program, including 
     gender, age, and race;
       ``(E) a description of how the proposed program will 
     address the barriers to employment of the targeted 
     populations;
       ``(F) a description of the manner in which the eligible 
     entity will evaluate the program; and
       ``(G) a description of the ability of the eligible entity 
     to carry out and expand the program after the expiration of 
     the grant period.
       ``(4) Equitable distribution to rural areas.--In awarding 
     grants under this subsection, the Secretary shall ensure an 
     equitable distribution of such grants to rural areas.
       ``(5) Use of funds.--
       ``(A) In general.--An eligible entity that receives a grant 
     under this subsection shall use the grant funds to carry 
     out--
       ``(i) activities that will assist youth in preparing for, 
     entering, and retaining employment, including the activities 
     described in section 129 for out-of-school youth;
       ``(ii) activities designed to strengthen academic skills 
     that would assist--

       ``(I) in-school participants to be successful in secondary 
     school and continue such participants' education; and
       ``(II) out-of-school youth to earn a high school diploma or 
     its recognized equivalent, or prepare for postsecondary 
     programs;

       ``(iii) activities designed to assist youth in economically 
     distressed areas;
       ``(iv) subsidized employment for not more than 9 months 
     that provides direct experience in a sector that has 
     opportunities for full-time employment;
       ``(v) career and academic advisement, activities to promote 
     financial literacy and the attainment of entrepreneurial 
     skills, and labor market information on high-skill, high-
     wage, and nontraditional occupations; and
       ``(vi) such other activities as the Secretary determines 
     are appropriate to ensure that youth entering the workforce 
     have the skills needed by employers.
       ``(B) Participant eligibility.--An individual who is not 
     younger than 16 years of age and not older than 21 years of 
     age, as of the time the eligibility determination is made, 
     who face barriers to employment, including an individual who 
     is an individual with a disability, may be eligible to 
     participate in activities under this subsection.
       ``(6) Special rule.--An eligible entity that receives a 
     grant under this subsection shall coordinate activities with 
     the designated State agency (as defined in section 7 of the 
     Rehabilitation Act of 1973 (29 U.S.C. 705)) and other 
     appropriate State agencies in the State to be served.
       ``(7) Matching funds required.--The Secretary shall require 
     that an eligible entity that receives a grant under this 
     subsection provide non-Federal matching funds in an amount to 
     be determined by the Secretary that is not less than 10 
     percent of the cost of activities carried out under the 
     grant. The Secretary may require that such non-Federal 
     matching funds be provided in cash resources, noncash 
     resources, or a combination of cash and noncash resources.
       ``(8) Evaluations.--The Secretary may require that an 
     eligible entity that receives a grant under this subsection 
     participate in an evaluation of activities carried out under 
     this subsection, including an evaluation using the techniques 
     described in section 172(c).''.

     SEC. 145. TECHNICAL ASSISTANCE.

       Section 170 (29 U.S.C. 2915) is amended--
       (1) in subsection (a)(1), by--
       (A) inserting ``the training of staff providing rapid 
     response services, the training of other staff of recipients 
     of funds under this title, the training of members of State 
     boards and local boards, peer review activities under this 
     title,'' after ``localities,''; and
       (B) striking ``from carrying out activities'' and all that 
     follows through the period and inserting ``to implement the 
     amendments made by the Workforce Investment Act Amendments of 
     2005.'';
       (2) in subsection (a)(2), by adding at the end the 
     following: ``The Secretary shall also hire staff qualified to 
     provide the assistance described in paragraph (1).'';
       (3) in subsection (b)(2), by striking the last sentence and 
     inserting ``Such projects shall be administered by the 
     Employment and Training Administration.''; and
       (4) by adding at the end the following:
       ``(c) Best Practices Coordination.--The Secretary shall--
       ``(1) establish a system through which States may share 
     information regarding best practices with regard to the 
     operation of workforce investment activities under this Act;
       ``(2) evaluate and disseminate information regarding best 
     practices and identify knowledge gaps; and
       ``(3) commission research under section 171(c) to address 
     knowledge gaps identified under paragraph (2).''.

     SEC. 146. DEMONSTRATION, PILOT, MULTISERVICE, RESEARCH, AND 
                   MULTI-
                   STATE PROJECTS.

       (a) Demonstration and Pilot Projects.--Section 171(b) (29 
     U.S.C. 2916(b)) is amended--
       (1) in paragraph (1)--
       (A) by striking ``Under a'' and inserting ``Consistent with 
     the priorities specified in the'';
       (B) by striking subparagraphs (A) through (E) and inserting 
     the following:
       ``(A) projects that assist national employers in connecting 
     with the workforce investment system established under this 
     title in order to facilitate the recruitment and employment 
     of needed workers for career ladder jobs and to provide 
     information to such system on skills and occupations in 
     demand;
       ``(B) projects that promote the development of systems that 
     will improve the maximum effectiveness of programs carried 
     out under this title;
       ``(C) projects that focus on opportunities for employment 
     in industries and sectors of industries that are 
     experiencing, or are likely to experience, high rates of 
     growth and jobs with wages leading to self-sufficiency;
       ``(D) computerized, individualized, self-paced training 
     projects targeted to dislocated, disadvantaged, or incumbent 
     workers utilizing equipment and curriculum designed in 
     partnership with industries for employment in the operations, 
     repair, and maintenance of high-tech equipment that is used 
     in integrated systems technology;
       ``(E) projects carried out by States and local areas to 
     test innovative approaches to delivering employment-related 
     services;'';
       (C) in subparagraph (G), by striking ``and'' after the 
     semicolon; and
       (D) by striking subparagraph (H) and inserting the 
     following:
       ``(H) projects that provide retention grants, which shall--
       ``(i) be made to qualified job training programs offering 
     instruction, assessment, or professional coaching, upon 
     placement of a low-income individual trained by the program 
     involved in employment with an employer and retention of the 
     low-income individual in that employment with that employer 
     for a period of 1 year, if that employment provides the low-
     income individual with an annual salary--

       ``(I) that is at least $10,000 more than the individual's 
     federally adjusted income for the previous year; and
       ``(II) that is not less than twice the poverty line 
     applicable to the individual; and

       ``(ii) be made taking into account the economic benefit 
     received by the Federal Government from the employment and 
     retention of the individual, including the economic benefit 
     from tax revenue and decreased public subsidies;
       ``(I) targeted innovation projects that improve access to 
     and delivery of employment and training services, with 
     emphasis given to projects that incorporate advanced 
     technologies to facilitate the connection of individuals to 
     the information and tools the individuals need to upgrade 
     skills;
       ``(J) projects that promote the use of distance learning, 
     enabling students to take courses through the use of media 
     technology such as videos, teleconferencing computers, and 
     the Internet; and
       ``(K) projects that provide comprehensive education and 
     training services, and support services, in coordination with 
     local boards, for populations in targeted high poverty areas 
     where the greatest barriers to employment exist, including 
     ex-offenders, out-of-school youth, and public assistance 
     recipient populations.''; and
       (2) in paragraph (2)--
       (A) by striking subparagraph (B); and
       (B) by redesignating subparagraph (C) as subparagraph (B).
       (b) Multiservice Projects.--Section 171(c)(2)(B) (29 U.S.C. 
     2916(c)(2)(B)) is amended to read as follows:
       ``(B) Studies and reports.--
       ``(i) Net impact studies and reports.--

       ``(I) In general.--The Secretary, in coordination with the 
     Secretary of Education, shall conduct studies to determine 
     the net impacts of, including best practices of, programs, 
     services, and activities carried out under this title.
       ``(II) Reports.--The Secretary shall prepare and 
     disseminate to the public reports containing the results of 
     the studies conducted under subclause (I).

       ``(ii) Study on resources available to assist out-of-school 
     youth.--The Secretary, in coordination with the Secretary of 
     Education, may conduct a study examining the

[[Page 9574]]

     resources available at the Federal, State, and local levels 
     to assist out-of-school youth in obtaining the skills, 
     credentials, and work experience necessary to become 
     successfully employed, including the availability of funds 
     provided through average daily attendance and other 
     methodologies used by States and local areas to distribute 
     funds.
       ``(iii) Study of industry-based certification and 
     credentials.--

       ``(I) In general.--The Secretary shall conduct a study 
     concerning the role and benefits of credentialing and 
     certification to businesses and workers in the economy and 
     the implications of certification to the services provided 
     through the workforce investment system. The study may 
     examine issues such as--

       ``(aa) the characteristics of successful credentialing and 
     certification systems that serve business and individual 
     needs;
       ``(bb) the relative proportions of certificates and 
     credentials attained with assistance from the public sector, 
     with private-sector training of new hires or incumbent 
     workers, and by individuals on their own initiative without 
     other assistance, respectively;
       ``(cc) the return on human capital investments from 
     occupational credentials and industry-based skill 
     certifications, including the extent to which acquisition of 
     such credentials or certificates enhances outcomes such as 
     entry into employment, retention, earnings (including the 
     number and amount of wage increases), career advancement, and 
     layoff aversion;
       ``(dd) the implications of the effects of skill 
     certifications and credentials to the types and delivery of 
     services provided through the workforce investment system;
       ``(ee) the role that Federal and State governments play in 
     fostering the development of and disseminating credentials 
     and skill standards; and
       ``(ff) the use of credentials by businesses to achieve 
     goals for workforce skill upgrading and greater operating 
     efficiency.

       ``(II) Report to congress.--The Secretary shall prepare and 
     submit to Congress a report containing the results of the 
     study conducted pursuant to subclause (I). Such report may 
     include any recommendations that the Secretary determines are 
     appropriate to include in such report relating to promoting 
     the acquisition of industry-based certification and 
     credentials, and the appropriate role of the Department of 
     Labor and the workforce investment system in supporting the 
     needs of business and individuals with respect to such 
     certification and credentials.

       ``(iv) Study of effectiveness of workforce investment 
     system in meeting business needs.--

       ``(I) In general.--Using funds available to carry out this 
     section jointly with funds available to the Secretary of 
     Commerce and Administrator of the Small Business 
     Administration, the Secretary, in coordination with the 
     Secretary of Commerce and the Administrator of the Small 
     Business Administration, may conduct a study of the 
     effectiveness of the workforce investment system in meeting 
     the needs of business, with particular attention to the needs 
     of small business, including in assisting workers to obtain 
     the skills needed to utilize emerging technologies. In 
     conducting the study, the Secretary, in coordination with the 
     Secretary of Commerce and the Administrator of the Small 
     Business Administration, may examine issues such as--

       ``(aa) methods for identifying the workforce needs of 
     businesses and how the requirements of small businesses may 
     differ from larger establishments;
       ``(bb) business satisfaction with the workforce investment 
     system, with particular emphasis on the satisfaction of small 
     businesses;
       ``(cc) the extent to which business is engaged as a 
     collaborative partner in the workforce investment system, 
     including the extent of business involvement as members of 
     State boards and local boards, and the extent to which such 
     boards and one-stop centers effectively collaborate with 
     business and industry leaders in developing workforce 
     investment strategies, including strategies to identify high 
     growth opportunities;
       ``(dd) ways in which the workforce investment system 
     addresses changing skill needs of business that result from 
     changes in technology and work processes;
       ``(ee) promising practices for serving small businesses;
       ``(ff) the extent and manner in which the workforce 
     investment system uses technology to serve business and 
     individual needs, and how uses of technology could enhance 
     efficiency and effectiveness in providing services; and
       ``(gg) the extent to which various segments of the labor 
     force have access to and utilize technology to locate job 
     openings and apply for jobs, and characteristics of 
     individuals utilizing such technology (such as age, gender, 
     race or ethnicity, industry sector, and occupational groups).

       ``(II) Report to congress.--The Secretary shall prepare and 
     submit to Congress a report containing the results of the 
     study described in subclause (I). Such report may include any 
     recommendations the Secretary determines are appropriate to 
     include in such report, including ways to enhance the 
     effectiveness of the workforce investment system in meeting 
     the needs of business for skilled workers.''.

       (c) Administration.--Section 171(d) (29 U.S.C. 2916(d)) is 
     amended by striking the last sentence and inserting the 
     following: ``Such projects shall be administered by the 
     Employment and Training Administration.''.
       (d) Next Generation Technologies.--Section 171 (29 U.S.C. 
     2916) is amended by adding at the end the following:
       ``(e) Skill Certification Pilot Projects.--
       ``(1) Pilot projects.--In accordance with subsection (b) 
     and from funds appropriated pursuant to paragraph (10), the 
     Secretary shall establish and carry out not more than 10 
     pilot projects to establish a system of industry-validated 
     national certifications of skills, including--
       ``(A) not more than 8 national certifications of skills in 
     high-technology industries, including biotechnology, 
     telecommunications, highly automated manufacturing (including 
     semiconductors), nanotechnology, and energy technology; and
       ``(B) not more than 2 cross-disciplinary national 
     certifications of skills in homeland security technology.
       ``(2) Grants to eligible entities.--In carrying out the 
     pilot projects, the Secretary shall make grants to eligible 
     entities, for periods of not less than 36 months and not more 
     than 48 months, to carry out the authorized activities 
     described in paragraph (7) with respect to the certifications 
     described in paragraph (1). In awarding grants under this 
     subsection the Secretary shall take into consideration 
     awarding grants to eligible entities from diverse geographic 
     areas, including rural areas.
       ``(3) Eligible entities.--
       ``(A) Definition of eligible entity.--In this subsection 
     the term `eligible entity' means an entity that shall work in 
     conjunction with a local board and shall include as a 
     principal participant 1 or more of the following:
       ``(i) An educational institution, including a 2- or 4-year 
     college, or a technical or vocational school.
       ``(ii) An advanced technology education center.
       ``(iii) A local board.
       ``(iv) A representative of a business in a target industry 
     for the certification involved.
       ``(v) A representative of an industry association, labor 
     organization, or community development organization.
       ``(B) History of demonstrated capability required.--To be 
     eligible to receive a grant under this subsection, an 
     eligible entity shall have a history of demonstrated 
     capability for effective collaboration with industry on 
     workforce investment activities that is consistent with the 
     objectives of this title.
       ``(4) Applications.--To be eligible to receive a grant 
     under this subsection, an eligible entity shall submit an 
     application to the Secretary at such time, in such manner, 
     and containing such information as the Secretary may require.
       ``(5) Criteria.--The Secretary shall establish criteria, 
     consistent with paragraph (6), for awarding grants under this 
     subsection.
       ``(6) Priority.--In selecting eligible entities to receive 
     grants under this subsection, the Secretary shall give 
     priority to eligible entities that demonstrate the 
     availability of and ability to provide matching funds from 
     industry or nonprofit sources. Such matching funds may be 
     provided in cash or in kind.
       ``(7) Authorized activities.--
       ``(A) In general.--An eligible entity that receives a grant 
     under this subsection shall use the funds made available 
     through the grant--
       ``(i) to facilitate the establishment of certification 
     requirements for a certification described in paragraph (1) 
     for an industry;
       ``(ii) to develop and initiate a certification program that 
     includes preparatory courses, course materials, procedures, 
     and examinations, for the certification; and
       ``(iii) to collect and analyze data related to the program 
     at the program's completion, and to identify best practices 
     (consistent with paragraph (8)) that may be used by State and 
     local workforce investment boards in the future.
       ``(B) Basis for requirements.--The certification 
     requirements established under the grant shall be based on 
     applicable skill standards for the industry involved that 
     have been developed by or linked to national centers of 
     excellence under the National Science Foundation's Advanced 
     Technological Education Program. The requirements shall 
     require an individual to demonstrate an identifiable set of 
     competencies relevant to the industry in order to receive 
     certification. The requirements shall be designed to provide 
     evidence of a transferable skill set that allows flexibility 
     and mobility of workers within a high technology industry.
       ``(C) Relationship to training and education programs.--The 
     eligible entity shall ensure that--
       ``(i) a training and education program related to 
     competencies for the industry involved, that is flexible in 
     mode and timeframe for delivery and that meets the needs of 
     those seeking the certification, is offered; and

[[Page 9575]]

       ``(ii) the certification program is offered at the 
     completion of the training and education program.
       ``(D) Relationship to the associate degree.--The eligible 
     entity shall ensure that the certification program is 
     consistent with the requirements for a 2-year associate 
     degree.
       ``(E) Availability.--The eligible entity shall ensure that 
     the certification program is open to students pursuing 
     associate degrees, employed workers, and displaced workers.
       ``(8) Consultation.--The Secretary shall consult with the 
     Director of the National Science Foundation to ensure that 
     the pilot projects build on the expertise and information 
     about best practices gained through the implementation of the 
     National Science Foundation's Advanced Technological 
     Education Program.
       ``(9) Core components; guidelines; reports.--After 
     collecting and analyzing the data obtained from the pilot 
     programs, the Secretary shall--
       ``(A) establish the core components of a model high-
     technology certification program;
       ``(B) establish guidelines to assure development of a 
     uniform set of standards and policies for such programs;
       ``(C) prepare and submit a report on the pilot projects to 
     the Committee on Health, Education, Labor, and Pensions of 
     the Senate and the Committee on Education and the Workforce 
     of the House of Representatives; and
       ``(D) make available to the public both the data and the 
     report.
       ``(10) Authorization of appropriations.--In addition to 
     amounts authorized to be appropriated under section 174(b), 
     there is authorized to be appropriated $30,000,000 for fiscal 
     year 2006 to carry out this subsection.''.
       (e) Integrated Workforce Training Programs for Adults With 
     Limited English Proficiency.--Section 171 (29 U.S.C. 2916), 
     as amended by subsection (d), is further amended by adding at 
     the end the following:
       ``(f) Integrated Workforce Training Programs for Adults 
     With Limited English Proficiency.--
       ``(1) Definitions.--In this subsection:
       ``(A) Integrated workforce training.--The term `integrated 
     workforce training' means training that integrates 
     occupational skills training with language acquisition.
       ``(B) Secretary.--The term `Secretary' means the Secretary 
     of Labor in consultation with the Secretary of Education.
       ``(2) Demonstration project.--In accordance with subsection 
     (b) and from funds appropriated pursuant to paragraph (11), 
     the Secretary shall establish and implement a national 
     demonstration project designed to both analyze and provide 
     data on workforce training programs that integrate English 
     language acquisition and occupational training.
       ``(3) Grants.--
       ``(A) In general.--In carrying out the demonstration 
     project, the Secretary shall make not less than 10 grants, on 
     a competitive basis, to eligible entities to provide the 
     integrated workforce training programs. In awarding grants 
     under this subsection the Secretary shall take into 
     consideration awarding grants to eligible entities from 
     diverse geographic areas, including rural areas.
       ``(B) Periods.--The Secretary shall make the grants for 
     periods of not less than 24 months and not more than 48 
     months.
       ``(4) Eligible entities.--
       ``(A) In general.--To be eligible to receive a grant under 
     this subsection, an eligible entity shall work in conjunction 
     with a local board and shall include as a principal 
     participant 1 or more of the following:
       ``(i) An employer or employer association.
       ``(ii) A nonprofit provider of English language 
     instruction.
       ``(iii) A provider of occupational or skills training.
       ``(iv) A community-based organization.
       ``(v) An educational institution, including a 2- or 4-year 
     college, or a technical or vocational school.
       ``(vi) A labor organization.
       ``(vii) A local board.
       ``(B) Expertise.--To be eligible to receive a grant under 
     this subsection, an eligible entity shall have proven 
     expertise in--
       ``(i) serving individuals with limited English proficiency, 
     including individuals with lower levels of oral and written 
     English; and
       ``(ii) providing workforce programs with training and 
     English language instruction.
       ``(5) Applications.--
       ``(A) In general.--To be eligible to receive a grant under 
     this subsection, an eligible entity shall submit an 
     application to the Secretary at such time, in such manner, 
     and containing such information as the Secretary may require.
       ``(B) Contents.--Each application submitted under 
     subparagraph (A) shall--
       ``(i) contain information, including capability statements, 
     that demonstrates that the eligible entity has the expertise 
     described in paragraph (4)(B); and
       ``(ii) include an assurance that the program to be assisted 
     shall--

       ``(I) establish a generalized adult bilingual workforce 
     training and education model that integrates English language 
     acquisition and occupational training, and incorporates the 
     unique linguistic and cultural factors of the participants;
       ``(II) establish a framework by which the employer, 
     employee, and other relevant members of the eligible entity 
     can create a career development and training plan that 
     assists both the employer and the employee to meet their 
     long-term needs;
       ``(III) ensure that the framework established under 
     subclause (II) takes into consideration the knowledge, 
     skills, and abilities of the employee with respect to both 
     the current and economic conditions of the employer and 
     future labor market conditions relevant to the local area; 
     and
       ``(IV) establish identifiable measures so that the progress 
     of the employee and employer and the relative efficacy of the 
     program can be evaluated and best practices identified.

       ``(6) Criteria.--The Secretary shall establish criteria for 
     awarding grants under this subsection.
       ``(7) Integrated workforce training programs.--
       ``(A) Program components.--
       ``(i) Required components.--Each program that receives 
     funding under this subsection shall--

       ``(I) test an individual's English language proficiency 
     levels to assess oral and literacy gains from the beginning 
     and throughout program enrollment;
       ``(II) combine training specific to a particular occupation 
     or occupational cluster, with--

       ``(aa) English language instruction, such as instruction 
     through an English as a Second Language program, or an 
     English for Speakers of Other Languages program;
       ``(bb) basic skills instruction; and
       ``(cc) supportive services;

       ``(III) effectively integrate public and private sector 
     entities, including the local workforce investment system and 
     its functions, to achieve the goals of the program; and
       ``(IV) require matching or in-kind resources from private 
     and nonprofit entities.

       ``(ii) Permissible components.--The program may offer other 
     services, as necessary to promote successful participation 
     and completion, including work-based learning, substance 
     abuse treatment, and mental health services.
       ``(B) Goal.--Each program that receives funding under this 
     subsection shall be designed to prepare limited English 
     proficient adults for, and place such adults in employment 
     in, growing industries with identifiable career ladder paths.
       ``(C) Program types.--In selecting programs to receive 
     funding under this subsection, the Secretary shall select 
     programs that meet 1 or more of the following criteria:
       ``(i) A program that--

       ``(I) serves unemployed, limited English proficient 
     individuals with significant work experience or substantial 
     education but persistently low wages; and
       ``(II) aims to prepare such individuals for, and place such 
     individuals in, higher paying employment, defined for 
     purposes of this subparagraph as employment that provides at 
     least 75 percent of the median wage in the local area.

       ``(ii) A program that--

       ``(I) serves limited English proficient individuals with 
     lower levels of oral and written fluency, who are working but 
     at persistently low wages; and
       ``(II) aims to prepare such individuals for, and place such 
     individuals in, higher paying employment, through services 
     provided at the worksite, or at a location central to several 
     work sites, during work hours.

       ``(iii) A program that--

       ``(I) serves unemployed, limited English proficient 
     individuals with lower levels of oral and written fluency, 
     who have little or no work experience; and
       ``(II) aims to prepare such individuals for, and place such 
     individuals in, employment through services that include 
     subsidized employment, in addition to the components required 
     in subparagraph (A)(i).

       ``(iv) A program that includes funds from private and 
     nonprofit entities.
       ``(D) Program approaches.--In selecting programs to receive 
     funding under this subsection, the Secretary shall select 
     programs with different approaches to integrated workforce 
     training, in different contexts, in order to obtain 
     comparative data on multiple approaches to integrated 
     workforce training and English language instruction, to 
     ensure programs are tailored to characteristics of 
     individuals with varying skill levels, and to assess how 
     different curricula work for limited English proficient 
     populations. Such approaches may include--
       ``(i) bilingual programs in which the workplace language 
     component and the training are conducted in a combination of 
     an individual's native language and English;
       ``(ii) integrated workforce training programs that combine 
     basic skills, language instruction, and job specific skills 
     training; or
       ``(iii) sequential programs that provide a progression of 
     skills, language, and training to ensure success upon an 
     individual's completion of the program.
       ``(8) Evaluation by eligible entity.--Each eligible entity 
     that receives a grant under

[[Page 9576]]

     this subsection for a program shall carry out a continuous 
     program evaluation and an evaluation specific to the last 
     phase of the program operations.
       ``(9) Evaluation by secretary.--
       ``(A) In general.--The Secretary shall conduct an 
     evaluation of program impacts of the programs funded under 
     the demonstration project, with a random assignment, 
     experimental design impact study done at each worksite at 
     which such a program is carried out.
       ``(B) Data collection and analysis.--The Secretary shall 
     collect and analyze the data from the demonstration project 
     to determine program effectiveness, including gains in 
     language proficiency, acquisition of skills, and job 
     advancement for program participants.
       ``(C) Report.--The Secretary shall prepare and submit to 
     the Committee on Health, Education, Labor, and Pensions of 
     the Senate and the Committee on Education and the Workforce 
     of the House of Representatives, and make available to the 
     public, a report on the demonstration project, including the 
     results of the evaluation.
       ``(10) Technical assistance.--The Secretary shall provide 
     technical assistance to recipients of grants under this 
     subsection throughout the grant periods.
       ``(11) Authorization of appropriations.--In addition to 
     amounts authorized to be appropriated under section 174(b), 
     there is authorized to be appropriated $10,000,000 for fiscal 
     year 2006 to carry out this subsection.''.
       (f) Community-Based Job Training.--Section 171 (29 U.S.C. 
     2916), as amended by subsection (e), is further amended by 
     adding at the end the following:
       ``(g) Community-Based Job Training.--
       ``(1) Definitions.--In this subsection:
       ``(A) Community college.--The term `community college' 
     means--
       ``(i) an institution of higher education, as defined in 
     section 101 of the Higher Education Act of 1965 (20 U.S.C. 
     1001), that provides a 2-year degree that is acceptable for 
     full credit toward a bachelor's degree; or
       ``(ii) a tribally controlled college or university, as 
     defined in section 2 of the Tribally Controlled College or 
     University Assistance Act of 1978 (25 U.S.C. 1801).
       ``(B) Eligible entity.--The term `eligible entity' means a 
     community college or a consortium composed of a community 
     college and an institution of higher education, that shall 
     work with--
       ``(i) a local board;
       ``(ii) a business in the qualified industry or an industry 
     association in the qualified industry, as identified in the 
     application of the entity; and
       ``(iii) an economic development entity.
       ``(C) Institution of higher education.--Except as otherwise 
     provided in subparagraph (A)(i), the term `institution of 
     higher education' has the meaning given the term in section 
     101 of the Higher Education Act of 1965 (20 U.S.C. 1001) and 
     the meaning given the term postsecondary vocational 
     institution in section 102(a)(1)(B) of such Act (20 U.S.C. 
     1002(a)(1)(B)).
       ``(D) Qualified industry.--The term `qualified industry' 
     means an industry or economic sector that is projected to 
     experience significant growth, such as an industry or 
     economic sector that--
       ``(i) is projected to add substantial numbers of new jobs 
     to the regional economy;
       ``(ii) has or is projected to have significant impact on 
     the regional economy;
       ``(iii) impacts or is projected to impact the growth of 
     other industries or economic sectors in the regional economy;
       ``(iv) is being transformed by technology and innovation 
     requiring new knowledge or skill sets for workers;
       ``(v) is a new or emerging industry or economic sector that 
     is projected to grow; or
       ``(vi) requires high skills and has significant labor 
     shortages in the regional economy.
       ``(2) Demonstration project.--In addition to the 
     demonstration projects authorized under subsection (b), the 
     Secretary may establish and implement a national 
     demonstration project designed--
       ``(A) to develop local innovative solutions to the 
     workforce challenges facing high-growth, high-skill 
     industries with labor shortages; and
       ``(B) to increase employment opportunities for workers in 
     high-growth, high-demand occupations by establishing 
     partnerships among education entities, the workforce 
     investment system, and businesses in high-growth, high-skill 
     industries or sectors.
       ``(3) Grants.--In carrying out the national demonstration 
     project authorized under this subsection, the Secretary shall 
     award grants, on a competitive basis, for 2, 3, or 4 years, 
     in accordance with generally applicable Federal requirements, 
     to eligible entities to enable the eligible entities to carry 
     out activities authorized under this subsection.
       ``(4) Applications.--To be eligible to receive a grant 
     under this subsection, an eligible entity shall submit an 
     application to the Secretary at such time, in such manner, 
     and containing such information as the Secretary may require, 
     including--
       ``(A) a description of the eligible entity that will offer 
     training under the grant;
       ``(B) a justification of the need for discretionary funding 
     under the grant, including the need for external funds to 
     create a program to carry out the activities described in 
     paragraph (6);
       ``(C) an economic analysis of the local labor market to 
     identify--
       ``(i) high-growth, high-demand industries;
       ``(ii) the workforce issues faced by such industries; and
       ``(iii) potential participants in programs funded under 
     this subsection;
       ``(D) a description of the qualified industry for which the 
     training will occur, the availability of competencies on 
     which the training will be based, and how the grant will help 
     workers acquire the competencies and skills necessary for 
     employment;
       ``(E) a description of the involvement of the local board 
     and businesses, including small businesses, in the geographic 
     area where the proposed grant will be implemented;
       ``(F) performance measures for the grant, including the 
     expected number of individuals to be trained in a qualified 
     industry, the employment and retention rates for such 
     individuals in a qualified industry, and initial earnings and 
     earnings increases for such individuals;
       ``(G) a description of how the activities funded by the 
     grant will be coordinated with activities provided through 
     the one-stop center in the local area; and
       ``(H) a description of the local or private resources that 
     will--
       ``(i) support the activities carried out under this 
     subsection; and
       ``(ii) enable the entity to carry out and expand such 
     activities after the expiration of the grant.
       ``(5) Factors for award of grant.--
       ``(A) In general.--In awarding grants under this 
     subsection, the Secretary shall consider--
       ``(i) the extent of public and private collaboration, 
     including existing partnerships among qualified industries, 
     the eligible entity, and the public workforce investment 
     system;
       ``(ii) the extent to which the grant will provide job 
     seekers with high-quality training for employment in high-
     growth, high-demand occupations;
       ``(iii) the extent to which the grant will expand the 
     eligible entity and local one-stop center's capacity to be 
     demand-driven and responsive to local economic needs;
       ``(iv) the extent to which local businesses commit to hire, 
     retain, or advance individuals who receive training through 
     the grant; and
       ``(v) the extent to which the eligible entity commits to 
     make any newly developed products, such as skill standards, 
     assessments, or industry-recognized training curricula, 
     available for dissemination nationally.
       ``(B) Leveraging of resources.--In awarding grants under 
     this subsection, the Secretary shall also consider--
       ``(i) the extent to which local or private resources will 
     be made available to support the activities carried out under 
     this subsection, taking into account the resources of the 
     eligible entity and the entity's partners; and
       ``(ii) the ability of an eligible entity to continue to 
     carry out and expand such activities after the expiration of 
     the grant.
       ``(C) Distribution of grants.--In awarding grants under 
     this subsection, the Secretary shall ensure an equitable 
     distribution of such grants across diverse industries and 
     geographic areas.
       ``(6) Use of funds.--An eligible entity that receives a 
     grant under this subsection--
       ``(A) shall use the grant funds for--
       ``(i) the development by the community college that is a 
     part of the eligible entity in collaboration with other 
     partners identified in the application, and, if applicable, 
     other representatives of qualified industries, of rigorous 
     training and education programs leading to an industry-
     recognized credential or degree and employment in the 
     qualified industry; and
       ``(ii) training of adults, incumbent workers, dislocated 
     workers, or out-of-school youth in the skills and 
     competencies needed to obtain or upgrade employment in a 
     qualified industry identified in the eligible entity's 
     application; and
       ``(B) may use the grant funds for--
       ``(i) disseminating information on training available for 
     high-growth, high-demand occupations in qualified industries 
     through the one-stop delivery system to prospective 
     participants, businesses, business intermediaries, and 
     community-based organizations in the region, including 
     training available through the grant;
       ``(ii) referring individuals trained under the grant for 
     employment in qualified industries;
       ``(iii) enhancing integration of community colleges, 
     training and education with businesses, and the one-stop 
     system to meet the training needs of qualified industries for 
     new and incumbent workers;
       ``(iv) providing training and relevant job skills to small 
     business owners or operators to facilitate small business 
     development in high-growth industries; or
       ``(v) expanding or creating programs for distance, evening, 
     weekend, modular, or compressed learning opportunities that 
     provide relevant skill training in high-growth, high-demand 
     industries.

[[Page 9577]]

       ``(7) Authority to require non-federal share.--The 
     Secretary may require that recipients of grants under this 
     subsection provide a non-Federal share, from either cash or 
     noncash resources, of the costs of activities carried out 
     under a grant awarded under this subsection.
       ``(8) Performance accountability and evaluation.--
       ``(A) Performance accountability.--The Secretary shall 
     require an eligible entity that receives a grant under this 
     subsection to submit an interim and final report to the 
     Secretary on the impact on business partners and employment 
     outcomes obtained by individuals receiving training under 
     this subsection using the performance measures identified in 
     the eligible entity's grant application.
       ``(B) Evaluation.--The Secretary shall require that an 
     eligible entity that receives a grant under this subsection 
     participate in an evaluation of activities carried out under 
     this subsection, including an evaluation using the techniques 
     described in section 172(c).''.

     SEC. 147. NATIONAL DISLOCATED WORKER GRANTS.

       (a) In General.--Section 173 (29 U.S.C. 2918) is amended--
       (1) by striking the heading and inserting the following:

     ``SEC. 173. NATIONAL DISLOCATED WORKER GRANTS.'';

       and
       (2) in subsection (a)--
       (A) by striking the matter preceding paragraph (1) and 
     inserting the following:
       ``(a) In General.--The Secretary is authorized to award 
     national dislocated worker grants--'';
       (B) in paragraph (1), by striking ``subsection (c)'' and 
     inserting ``subsection (b)'';
       (C) in paragraph (3), by striking ``and'' after the 
     semicolon; and
       (D) by striking paragraph (4) and inserting the following:
       ``(4) to a State or entity (as defined in subsection 
     (b)(1)(B)) to carry out subsection (e), including providing 
     assistance to eligible individuals;
       ``(5) to a State or entity (as defined in subsection 
     (b)(1)(B)) to carry out subsection (f), including providing 
     assistance to eligible individuals;
       ``(6) to provide additional assistance to a State board or 
     local board where a higher than average demand for employment 
     and training activities for dislocated members of the Armed 
     Forces, or spouses, as described in section 101(11)(E), of 
     members of the Armed Forces, described in subsection 
     (b)(2)(A)(iv), exceeds State and local resources for 
     providing such services, and where such programs are to be 
     carried out in partnership with the Department of Defense and 
     Department of Veterans Affairs transition assistance 
     programs; and
       ``(7) to provide assistance to a State for statewide or 
     local use in order to--
       ``(A) address cases in which there have been worker 
     dislocations across multiple sectors, across multiple 
     businesses within a sector, or across multiple local areas, 
     and such workers remain dislocated;
       ``(B) meet emerging economic development needs; and
       ``(C) train eligible individuals who are dislocated workers 
     described in subparagraph (A).

     The Secretary shall issue a final decision on an application 
     for a national dislocated worker grant under this subsection 
     not later than 45 calendar days after receipt of the 
     application. The Secretary shall issue a notice of obligation 
     for such a grant not later than 10 days after the award of 
     the grant.''.
       (b) Administration and Additional Assistance.--Section 173 
     (29 U.S.C. 2918) is amended--
       (1) by striking subsection (b);
       (2) by redesignating subsections (c) through (g) as 
     subsections (b) through (f), respectively;
       (3) in paragraph (2) of subsection (b) (as redesignated by 
     paragraph (2))--
       (A) in subparagraph (A), in the matter preceding clause 
     (i), by striking ``national emergency grant'' and inserting 
     ``national dislocated worker grant''; and
       (B) in subparagraph (C), by striking ``national emergency 
     grants'' and inserting ``national dislocated worker grants'';
       (4) by striking subsection (d) (as redesignated by 
     paragraph (2)) and inserting the following:
       ``(d) Additional Assistance.--
       ``(1) In general.--From the amount appropriated and made 
     available to carry out this section for any program year, the 
     Secretary shall use not more than $20,000,000 to make grants 
     to States to provide employment and training activities under 
     section 134, in accordance with subtitle B.
       ``(2) Eligible states.--The Secretary shall make a grant 
     under paragraph (1) to a State for a program year if--
       ``(A) the amount of the allotment that was made to the 
     State for the program year 2003 under the formula specified 
     in section 132(b)(1)(B) as such section was in effect on July 
     1, 2003, is greater than
       ``(B) the amount of the allotment that would be made to the 
     State for the program year under the formula specified in 
     section 132(b)(1)(B).
       ``(3) Amount of grants.--Subject to paragraph (1), the 
     amount of the grant made under paragraph (1) to a State for a 
     program year shall be based on the difference between--
       ``(A) the amount of the allotment that was made to the 
     State for the program year 2003 under the formula specified 
     in section 132(b)(1)(B) as such section was in effect on July 
     1, 2003; and
       ``(B) the amount of the allotment that would be made to the 
     State for the program year under the formula specified in 
     section 132(b)(1)(B).'';
       (5) in subsection (e) (as redesignated by paragraph (2))--
       (A) in paragraph (1), by striking ``paragraph (4)(A)'' and 
     inserting ``paragraph (4)'';
       (B) in paragraph (2), by striking ``subsection (g)'' and 
     inserting ``subsection (f)'';
       (C) in paragraph (3)(B), by striking ``subsection 
     (a)(4)(A)'' and inserting ``subsection (a)(4)'';
       (D) in paragraph (4), by striking ``subsection (g)'' and 
     inserting ``subsection (f)'';
       (E) in paragraph (5), by striking ``subsection (g)'' and 
     inserting ``subsection (f)''; and
       (F) in paragraph (6)--
       (i) by striking ``subsection (g)'' and inserting 
     ``subsection (f)''; and
       (ii) by striking ``subsection (c)(1)(B)'' and inserting 
     ``subsection (b)(1)(B)''; and
       (6) in subsection (f) (as redesignated by paragraph (2))--
       (A) in paragraph (1)--
       (i) by striking ``paragraph (4)(B)'' and inserting 
     ``paragraph (5)''; and
       (ii) by striking ``subsection (f)(1)(A)'' and inserting 
     ``subsection (e)(1)(A)''; and
       (B) in paragraph (4)(B), by striking ``subsection 
     (a)(4)(B)'' and inserting ``subsection (a)(5)''.

     SEC. 148. AUTHORIZATION OF APPROPRIATIONS FOR NATIONAL 
                   ACTIVITIES.

       (a) In General.--Section 174(a)(1) (29 U.S.C. 2919(a)(1)) 
     is amended by striking ``1999 through 2003'' and inserting 
     ``2006 through 2011''.
       (b) Reservations.--Section 174(b) (29 U.S.C. 2919(b)) is 
     amended to read as follows:
       ``(b) Technical Assistance; Demonstration and Pilot 
     Projects, Evaluations, Incentive Grants.--
       ``(1) In general.--Subject to paragraph (2), there are 
     authorized to be appropriated to carry out sections 170 
     through 172, section 136(i), and section 503 such sums as may 
     be necessary for each of fiscal years 2006 through 2011.
       ``(2) Reservation.--Of the amount appropriated pursuant to 
     the authorization of appropriations under paragraph (1) for a 
     fiscal year, the Secretary shall, for each of the fiscal 
     years 2006 through 2011, reserve not less than 25 percent for 
     carrying out section 503.''.
       (c) Assistance for Eligible Workers.--Section 174(c) (29 
     U.S.C. 2919(c)) is amended--
       (1) in paragraphs (1)(A) and (2)(A), by striking 
     ``subsection (a)(4)(A)'' and inserting ``subsection (a)(4)''; 
     and
       (2) in paragraphs (1)(B) and (2)(B), by striking 
     ``subsection (a)(4)(B)'' and inserting ``subsection (a)(5)''.

                       Subtitle E--Administration

     SEC. 151. REQUIREMENTS AND RESTRICTIONS.

       Section 181(e) (29 U.S.C. 2931(e)) is amended by striking 
     ``economic development activities,''.

     SEC. 152. REPORTS.

       Section 185(c) (29 U.S.C. 2935(c)) is amended--
       (1) in paragraph (2), by striking ``and'' after the 
     semicolon;
       (2) in paragraph (3), by striking the period and inserting 
     ``; and''; and
       (3) by adding at the end the following:
       ``(4) shall have the option to submit or disseminate 
     electronically any reports, records, plans, or any other data 
     that are required to be collected or disseminated under this 
     title.''.

     SEC. 153. ADMINISTRATIVE PROVISIONS.

       (a) Annual Report.--Section 189(d) (29 U.S.C. 2939(d)) is 
     amended--
       (1) in paragraph (3), by striking ``and'' after the 
     semicolon;
       (2) by redesignating paragraph (4) as paragraph (5); and
       (3) by inserting after paragraph (3) the following:
       ``(4) the negotiated levels of performance of the States, 
     the States' requests for adjustments of such levels, and the 
     adjustments of such levels that are made; and''.
       (b) Availability.--Section 189(g)(2) (29 U.S.C. 2939(g)(2)) 
     is amended, in the first sentence--
       (1) by striking ``Funds'' and inserting ``Except as 
     otherwise provided in this paragraph, funds''; and
       (2) by striking ``each State receiving'' and inserting 
     ``each recipient of''.
       (c) General Waivers.--Section 189(i)(4) (29 U.S.C. 
     2939(i)(4)) is amended--
       (1) in subparagraph (A)(i), by inserting ``the funding of 
     infrastructure costs for one-stop centers,'' after ``local 
     boards,'';
       (2) in subparagraph (C), by striking ``90'' and inserting 
     ``60''; and
       (3) by adding at the end the following:
       ``(D) Expedited requests.--The Secretary shall expedite 
     requests for waivers of statutory or regulatory requirements 
     that have been approved for a State pursuant to subparagraph 
     (B), if the requirements of this paragraph have been 
     satisfied.

[[Page 9578]]

       ``(E) Special rule.--With respect to any State that has a 
     waiver under this paragraph relating to the transfer 
     authority under section 133(b)(4), and has the waiver in 
     effect on the date of enactment of the Workforce Investment 
     Act Amendments of 2005 or subsequently receives such a 
     waiver, the waiver shall continue to apply for so long as the 
     State meets or exceeds State performance measures relating to 
     the indicators described in section 136(b)(2)(A)(i).''.

     SEC. 154. USE OF CERTAIN REAL PROPERTY.

       Section 193 (29 U.S.C. 2943) is amended to read as follows:

     ``SEC. 193. TRANSFER OF FEDERAL EQUITY IN STATE EMPLOYMENT 
                   SECURITY AGENCY REAL PROPERTY TO THE STATES.

       ``(a) Transfer of Federal Equity.--Notwithstanding any 
     other provision of law, any Federal equity acquired in real 
     property through grants to States awarded under title III of 
     the Social Security Act (42 U.S.C. 501 et seq.) or under the 
     Wagner-Peyser Act (29 U.S.C. 49 et seq.) is transferred to 
     the States that used the grants for the acquisition of such 
     equity. The portion of any real property that is attributable 
     to the Federal equity transferred under this section shall be 
     used to carry out activities authorized under title III of 
     the Social Security Act or the Wagner-Peyser Act. Any 
     disposition of such real property shall be carried out in 
     accordance with the procedures prescribed by the Secretary 
     and the portion of the proceeds from the disposition of such 
     real property that is attributable to the Federal equity 
     transferred under this section shall be used to carry out 
     activities authorized under title III of the Social Security 
     Act or the Wagner-Peyser Act.
       ``(b) Limitation on Use.--A State shall not use funds 
     awarded under title III of the Social Security Act or the 
     Wagner-Peyser Act to amortize the costs of real property that 
     is purchased by any State on or after the effective date of 
     this provision.''.

     SEC. 155. GENERAL PROGRAM REQUIREMENTS.

       Section 195 (29 U.S.C. 2945) is amended by adding at the 
     end the following:
       ``(14) Funds provided under this title shall not be used to 
     establish or operate fee-for-service enterprises that are not 
     affiliated with the one-stop service delivery systems 
     described in section 121(e) and that compete with private 
     sector employment agencies (as defined in section 701 of the 
     Civil Rights Act of 1964 (42 U.S.C. 2000e)).''.

     SEC. 156. TABLE OF CONTENTS.

       Section 1(b) (29 U.S.C. 9201 note) is amended--
       (1) by striking the item relating to section 106 and 
     inserting the following:

``Sec. 106. Purposes.'';

       (2) by striking the item relating to section 123 and 
     inserting the following:

``Sec. 123. Eligible providers of youth activities.'';

       (3) by striking the item relating to section 169 and 
     inserting the following:

``Sec. 169. Youth challenge grants.'';

       (4) by striking the item relating to section 173 and 
     inserting the following:

``Sec. 173. National dislocated worker grants.'';

       (5) by striking the item relating to section 193 and 
     inserting the following:

``Sec. 193. Transfer of Federal equity in State employment security 
              agency real property to the States.'';

       (6) by inserting after the item relating to section 243 the 
     following:

``Sec. 244. Integrated English literacy and civics education.'';

       and
       (7) by striking the item relating to section 502.

                      Subtitle F--Incentive Grants

     SEC. 161. INCENTIVE GRANTS.

       Section 503 (20 U.S.C. 9273) is amended--
       (1) by striking subsection (a) and inserting the following:
       ``(a) In General.--
       ``(1) Timeline.--
       ``(A) Prior to july 1, 2006.--Prior to July 1, 2006, the 
     Secretary shall award a grant to each State in accordance 
     with the provisions of this section as this section was in 
     effect on July 1, 2003.
       ``(B) Beginning july 1, 2006.--Beginning on July 1, 2006, 
     the Secretary shall award incentive grants to States for 
     performance described in paragraph (2) in carrying out 
     innovative programs consistent with the programs under 
     chapters 4 and 5 of subtitle B of title I, to implement or 
     enhance innovative and coordinated programs consistent with 
     the statewide economic, workforce, and educational interests 
     of the State.
       ``(2) Basis.--The Secretary shall award the grants on the 
     basis that States--
       ``(A) have exceeded the State adjusted levels of 
     performance for title I, the adjusted levels of performance 
     for title II, and the levels of performance under the Carl D. 
     Perkins Vocational and Technical Education Act of 1998 (20 
     U.S.C. 2301 et seq.); or
       ``(B) have--
       ``(i) met the State adjusted levels of performance for 
     title I, the adjusted levels of performance for title II, and 
     the levels of performance under the Carl D. Perkins 
     Vocational and Technical Education Act of 1998 (20 U.S.C. 
     2301 et seq.); and
       ``(ii) demonstrated--

       ``(I) exemplary coordination of Federal workforce and 
     education programs, statewide economic development, or 
     business needs;
       ``(II) exemplary performance in serving hard-to-serve 
     populations; or
       ``(III) effective--

       ``(aa) coordination of multiple systems into a 
     comprehensive workforce investment system, including 
     coordination of employment activities under the Wagner-Peyser 
     Act (29 U.S.C. 49 et seq.) and core activities under title I 
     as well as one-stop partner programs described in section 
     121;
       ``(bb) expansion of access to training, including through 
     increased leveraging of resources other than those funded 
     through programs under title I;
       ``(cc) implementation of statewide coordination activities 
     through agreements with relevant State agencies and offices, 
     including those responsible for programs under the Adult 
     Education and Family Literacy Act (20 U.S.C. 9201 et seq.) 
     and the Rehabilitation Act of 1973 (29 U.S.C. 701 et seq.);
       ``(dd) statewide coordination through local workforce 
     investment boards or areas;
       ``(ee) alignment of management information systems to 
     integrate participant information across programs; or
       ``(ff) integration of performance information systems and 
     common measures for accountability across workforce and 
     education programs.
       ``(3) Use of funds.--The funds awarded to a State under 
     this section may be used to carry out activities authorized 
     for States under chapters 4 and 5 of subtitle B of title I, 
     title II, and the Carl D. Perkins Vocational and Technical 
     Education Act of 1998 (20 U.S.C. 2301 et seq.), including 
     demonstration projects, and for such innovative projects or 
     programs that increase coordination and enhance service to 
     program participants, particularly hard-to-serve populations, 
     including--
       ``(A) activities that support business needs, especially 
     for incumbent workers and enhancing opportunities for 
     retention and advancement;
       ``(B) activities that support linkages with secondary, 
     postsecondary, or career and technical education programs, 
     including activities under the Carl D. Perkins Vocational and 
     Technical Education Act of 1998 (20 U.S.C. 2301 et seq.), the 
     Adult Education and Family Literacy Act (20 U.S.C. 9201 et 
     seq.), and the Rehabilitation Act of 1973 (29 U.S.C. 701 et 
     seq.);
       ``(C) activities that support statewide economic 
     development plans that support high-wage, high-skill, or 
     high-demand occupations leading to self-sufficiency;
       ``(D) activities that coordinate workforce investment 
     programs with other Federal and State programs related to the 
     activities under this Act;
       ``(E) activities that support the development of a 
     statewide integrated performance information system that 
     includes common measures;
       ``(F) activities that align management information systems 
     with integrated performance information across education and 
     workforce programs; or
       ``(G) activities that support local workforce investment 
     boards or areas in improving performance and program 
     coordination.
       ``(4) Waiver.--For States that have developed and 
     implemented a statewide integrated performance information 
     system with common measures, as described in paragraph 
     (3)(E), for federally funded workforce and education 
     programs, the Secretary may waive specified Federal reporting 
     requirements for such State to be in compliance with 
     reporting requirements under this Act and other workforce and 
     education programs as the Secretary has authority or 
     agreement to waive.
       ``(5) Technical assistance.--The Secretary shall reserve 4 
     percent of the funds available for grants under this section 
     to provide technical assistance to States to replicate best 
     practices or to develop integrated performance information 
     systems and strengthen coordination with education and 
     economic development.''; and
       (2) by striking subsection (d).

                   Subtitle G--Conforming Amendments

     SEC. 171. CONFORMING AMENDMENTS.

       (a) Older Americans Act of 1965.--Section 512(a) of the 
     Older Americans Act of 1965 (42 U.S.C. 3056j(a)) is amended 
     by striking ``(B)(vi)'' and inserting ``(B)(v)''.
       (b) Adult Education and Family Literacy Act.--Section 
     212(b)(3)(A)(vi) of the Adult Education and Family Literacy 
     Act (20 U.S.C. 9212(b)(3)(A)(vi)) is amended by striking 
     ``the representatives described in section 136(i)(1)'' and 
     inserting ``representatives of appropriate Federal agencies, 
     and representatives of States and political subdivisions, 
     business and industry, employees, eligible providers of 
     employment and training activities (as defined in section 
     101), educators, and participants (as defined in section 
     101), with expertise regarding workforce investment policies 
     and workforce investment activities (as defined in section 
     101)''.

[[Page 9579]]



  TITLE II--AMENDMENTS TO THE ADULT EDUCATION AND FAMILY LITERACY ACT

     SEC. 201. SHORT TITLE; PURPOSE.

       (a) Short Title.--This title may be cited as the ``Adult 
     Education and Family Literacy Act Amendments of 2005''.
       (b) Purpose.--Section 202 of the Adult Education and Family 
     Literacy Act (20 U.S.C. 9201) is amended--
       (1) in paragraph (2), by striking ``and'' after the 
     semicolon;
       (2) in paragraph (3), by striking ``education.'' and 
     inserting ``education and in the transition to postsecondary 
     education; and''; and
       (3) by adding at the end the following:
       ``(4) assist immigrants and other individuals with limited 
     English proficiency in improving their reading, writing, 
     speaking, and mathematics skills and acquiring an 
     understanding of the American free enterprise system, 
     individual freedom, and the responsibilities of 
     citizenship.''.

     SEC. 202. DEFINITIONS.

       Section 203 of the Adult Education and Family Literacy Act 
     (20 U.S.C. 9202) is amended--
       (1) in paragraph (1)--
       (A) in the matter preceding subparagraph (A), by striking 
     ``services or instruction below the postsecondary level'' and 
     inserting ``academic instruction and education services below 
     the postsecondary level that increase an individual's ability 
     to read, write, and speak in English and perform 
     mathematics''; and
       (B) by striking subparagraph (C)(i) and inserting the 
     following:
       ``(i) are basic skills deficient as defined in section 
     101;'';
       (2) in paragraph (2), by striking ``activities described in 
     section 231(b)'' and inserting ``programs and services which 
     include reading, writing, speaking, or mathematics skills, 
     workplace literacy activities, family literacy activities, 
     English language acquisition activities, or other activities 
     necessary for the attainment of a secondary school diploma or 
     its State recognized equivalent'';
       (3) in paragraph (5)--
       (A) by inserting ``an organization that has demonstrated 
     effectiveness in providing adult education, that may 
     include'' after ``means'';
       (B) in subparagraph (B), by striking ``of demonstrated 
     effectiveness'';
       (C) in subparagraph (C), by striking ``of demonstrated 
     effectiveness''; and
       (D) in subparagraph (I), by inserting ``or coalition'' 
     after ``consortium'';
       (4) in paragraph (6)--
       (A) by striking ``literacy program'' and inserting 
     ``language acquisition program'';
       (B) by striking ``literacy program'' and inserting 
     ``language acquisition program''; and
       (C) by inserting ``reading, writing, and speaking'' after 
     ``competence in'';
       (5) by striking paragraph (10);
       (6) by redesignating paragraphs (7) through (9) and (12) 
     through (18) as paragraphs (8) through (10) and (13) through 
     (19), respectively;
       (7) by inserting after paragraph (6) the following:
       ``(7) Essential components of reading instruction.--The 
     term `essential components of reading instruction' has the 
     meaning given the term in section 1208 of the Elementary and 
     Secondary Education Act of 1965 (20 U.S.C. 6368).'';
       (8) by inserting after paragraph (11) the following:
       ``(12) Limited english proficiency.--The term `limited 
     English proficiency', when used with respect to an 
     individual, means an adult or out-of-school youth who has 
     limited ability in speaking, reading, writing, or 
     understanding the English language, and--
       ``(A) whose native language is a language other than 
     English; or
       ``(B) who lives in a family or community environment where 
     a language other than English is the dominant language.'';
       (9) by striking paragraph (15), as redesignated by 
     paragraph (6), and inserting the following:
       ``(15) Outlying area.--The term `outlying area' means the 
     United States Virgin Islands, Guam, American Samoa, and the 
     Commonwealth of the Northern Mariana Islands.''; and
       (10) by striking paragraph (19), as redesignated by 
     paragraph (6), and inserting the following:
       ``(19) Workplace literacy program.--The term `workplace 
     literacy program' means an educational program designed to 
     improve the productivity of the workforce through the 
     improvement of literacy skills that is offered by an eligible 
     provider in collaboration with an employer or an employee 
     organization at a workplace, at an off-site location, or in a 
     simulated workplace environment.''.

     SEC. 203. HOME SCHOOLS.

       Section 204 of the Adult Education and Family Literacy Act 
     (20 U.S.C. 9203) is amended to read as follows:

     ``SEC. 204. HOME SCHOOLS.

       ``Nothing in this title shall be construed to affect home 
     schools, whether a home school is treated as a home school or 
     a private school under State law, or to compel a parent 
     engaged in home schooling to participate in an English 
     language acquisition program, family literacy services, or 
     adult education.''.

     SEC. 204. AUTHORIZATION OF APPROPRIATIONS.

       Section 205 of the Adult Education and Family Literacy Act 
     (20 U.S.C. 9204) is amended--
       (1) by striking ``1999'' and inserting ``2006''; and
       (2) by striking ``2003'' and inserting ``2011''.

     SEC. 205. RESERVATION OF FUNDS; GRANTS TO ELIGIBLE AGENCIES; 
                   ALLOTMENTS.

       Section 211 of the Adult Education and Family Literacy Act 
     (20 U.S.C. 9211) is amended--
       (1) by striking subsection (a) and inserting the following:
       ``(a) Reservation of Funds.--From the sum appropriated 
     under section 205 for a fiscal year, the Secretary--
       ``(1) shall reserve 1.5 percent to carry out section 242, 
     except that the amount so reserved shall not exceed 
     $10,000,000;
       ``(2) shall reserve 1.5 percent to carry out section 243 
     and subsection (f)(4), except that the amount so reserved 
     shall not exceed $8,000,000;
       ``(3) shall make available, to the Secretary of Labor, 1.72 
     percent for incentive grants under section 136(i); and
       ``(4) shall reserve 12 percent of the amount that remains 
     after reserving funds under paragraphs (1), (2) and (3) to 
     carry out section 244.'';
       (2) in subsection (c)(2)--
       (A) by inserting ``and the sole agency responsible for 
     administering or supervising policy for adult education and 
     literacy in the Republic of Palau'' after ``an initial 
     allotment under paragraph (1)'';
       (B) by inserting ``or served by the agency for the Republic 
     of Palau'' after ``by the eligible agency''; and
       (C) by striking ``States and outlying areas'' and inserting 
     ``States, outlying areas, and the Republic of Palau'';
       (3) in subsection (e)--
       (A) in paragraph (1)--
       (i) by striking ``the Republic of the Marshall Islands, the 
     Federated States of Micronesia, and''; and
       (ii) by striking ``the Republic of the Marshall Islands, 
     the Federated States of Micronesia, or'' and inserting 
     ``or''; and
       (B) in paragraph (3)--
       (i) by striking ``the Republic of the Marshall Islands, the 
     Federated States of Micronesia, and''; and
       (ii) by striking ``2001'' and inserting ``2007''; and
       (4) by striking subsection (f) and inserting the following:
       ``(f) Hold-Harmless Provisions.--
       ``(1) In general.--Notwithstanding subsection (c) and 
     subject to paragraph (2), for fiscal year 2005 and each 
     succeeding fiscal year, no eligible agency shall receive an 
     allotment under this section that is less than 90 percent of 
     the allotment the eligible agency received for the preceding 
     fiscal year under this section.
       ``(2) 100 percent allotment.--Notwithstanding paragraphs 
     (1) and (2) of subsection (e), an eligible agency that 
     receives only an initial allotment under subsection (c)(1) 
     (and no additional allotment under subsection (c)(2)) shall 
     receive an allotment under this section that is equal to 100 
     percent of the initial allotment under subsection (c)(1).
       ``(3) Ratable reduction.--If for any fiscal year the amount 
     available for allotment under this subtitle is insufficient 
     to satisfy the provisions of paragraphs (1) and (2), the 
     Secretary shall ratably reduce the payments to all eligible 
     agencies, as necessary.
       ``(4) Additional assistance.--
       ``(A) In general.--From amounts reserved under subsection 
     (a)(2), the Secretary shall make grants to eligible agencies 
     described in subparagraph (B) to enable such agencies to 
     provide activities authorized under chapter 2.
       ``(B) Eligibility.--An eligible agency is eligible to 
     receive a grant under this paragraph for a fiscal year if the 
     amount of the allotment such agency receives under this 
     section for the fiscal year is less than the amount such 
     agency would have received for the fiscal year if the 
     allotment formula under this section as in effect on 
     September 30, 2003, were in effect for such year.
       ``(C) Amount of grant.--The amount of a grant made to an 
     eligible agency under this paragraph for a fiscal year shall 
     be the difference between--
       ``(i) the amount of the allotment such agency would have 
     received for the fiscal year if the allotment formula under 
     this section as in effect on September 30, 2003, were in 
     effect for such year; and
       ``(ii) the amount of the allotment such agency receives 
     under this section for the fiscal year.''.

     SEC. 206. PERFORMANCE ACCOUNTABILITY SYSTEM.

       Section 212 of the Adult Education and Family Literacy Act 
     (20 U.S.C. 9212) is amended--
       (1) in subsection (b)--
       (A) in paragraph (1)(A)(ii), by striking ``additional 
     indicators of performance (if any)'' and inserting ``the 
     employment performance indicators'';
       (B) by striking paragraph (2) and inserting the following:
       ``(2) Indicators of performance.--
       ``(A) Core indicators of performance.--An eligible agency 
     shall identify in the State plan individual academic 
     performance indicators that include, at a minimum, the 
     following:

[[Page 9580]]

       ``(i) Measurable improvements in literacy skill levels in 
     reading, writing, and speaking the English language, 
     numeracy, problem solving, English language acquisition, and 
     other literacy skills.
       ``(ii) Placement in, retention in, or completion of, 
     postsecondary education or other training programs.
       ``(iii) Completion of a secondary school diploma, its 
     recognized equivalent, or a recognized alternative standard 
     for individuals with disabilities.
       ``(B) Employment performance indicators.--
       ``(i) In general.--An eligible agency shall identify in the 
     State plan individual participant employment performance 
     indicators that include, at a minimum, the following:

       ``(I) Entry into unsubsidized employment.
       ``(II) Retention in unsubsidized employment 6 months after 
     entry into the employment.
       ``(III) Increases in earnings from unsubsidized employment.

       (ii) Data collection.--The State workforce investment board 
     shall assist the eligible agency in obtaining and using 
     quarterly wage records to collect data for each of the 
     indicators described in clause (i), consistent with 
     applicable Federal and State privacy laws.
       ``(C) Indicators for workplace literacy programs.--Special 
     accountability measures may be negotiated for workplace 
     literacy programs.''; and
       (C) in paragraph (3)--
       (i) in subparagraph (A)--

       (I) in clause (i)(II), by striking ``in performance'' and 
     inserting ``the agency's performance outcomes in an 
     objective, quantifiable, and measurable form'';
       (II) in clause (ii), by striking ``3 programs years'' and 
     inserting ``2 program years'';
       (III) in clause (iii), by striking ``first 3 years'' and 
     inserting ``first 2 years'';
       (IV) in clause (iii), by striking ``first 3 program years'' 
     and inserting ``first 2 program years'';
       (V) in clause (v), by striking ``4th and 5th'' and 
     inserting ``3rd and 4th'';
       (VI) in clause (v), by striking ``to the fourth'' and 
     inserting ``to the third'';
       (VII) in clause (v), by striking ``fourth and fifth'' and 
     inserting ``third and fourth''; and
       (VIII) in clause (vi), by striking ``(II)'' and inserting 
     ``(I)'';

       (ii) in subparagraph (B)--

       (I) by striking the heading and inserting ``Levels of 
     employment performance'';
       (II) by striking ``may'' and inserting ``shall''; and
       (III) by striking ``additional'' and inserting ``employment 
     performance''; and

       (iii) by adding at the end the following:
       ``(C) Alternative assessment systems.--Eligible agencies 
     may approve the use of assessment systems that are not 
     commercially available standardized systems if such systems 
     meet the Standards for Educational and Psychological Testing 
     issued by the Joint Committee on Standards for Educational 
     and Psychological Testing of the American Educational 
     Research Association, the American Psychological Association, 
     and the National Council on Measurement in Education.'';
       (2) in subsection (c)--
       (A) in paragraph (1)--
       (i) by inserting ``the Governor, the State legislature, and 
     the State workforce investment board'' after ``Secretary''; 
     and
       (ii) by striking ``including'' and all that follows through 
     the period and inserting ``including the following:
       ``(A) Information on the levels of performance achieved by 
     the eligible agency with respect to the core indicators of 
     performance, and employment performance indicators.
       ``(B) Information on the number or percentage of qualifying 
     adults (as defined in section 211(d)) who are participants in 
     adult education programs under this subtitle and making 
     satisfactory progress toward 1 or more of each of the 
     following:
       ``(i) Core indicators of performance.
       ``(ii) Employment performance indicators.
       ``(iii) Other long-term objectives.
       ``(C) The number and type of each eligible provider that 
     receives funding under such grant.
       ``(D) The number of enrollees 16 to 18 years of age who 
     enrolled in adult education not later than 1 year after 
     participating in secondary school education.'';
       (B) in paragraph (2)(A), by inserting ``eligible providers 
     and'' after ``available to''; and
       (C) by adding at the end the following:
       ``(3) Data access.--The report made available under 
     paragraph (2) shall indicate which eligible agencies did not 
     have access to State unemployment insurance wage data in 
     measuring employment performance indicators.''; and
       (3) by adding at the end the following:
       ``(d) Program Improvement.--
       ``(1) In general.--If the Secretary determines that an 
     eligible agency did not meet its adjusted levels of 
     performance for the core indicators of performance described 
     in subsection (b)(2)(A) for any program year, the eligible 
     agency shall--
       ``(A) work with the Secretary to develop and implement a 
     program improvement plan for the 2 program years succeeding 
     the program year in which the eligible agency did not meet 
     its adjusted levels of performance; and
       ``(B) revise its State plan under section 224, if 
     necessary, to reflect the changes agreed to in the program 
     improvement plan.
       ``(2) Further assistance.--If, after the period described 
     in paragraph (1)(A), the Secretary has provided technical 
     assistance to the eligible agency but determines that the 
     eligible agency did not meet its adjusted levels of 
     performance for the core indicators of performance described 
     in subsection (b)(2)(A), the Secretary may require the 
     eligible agency to make further revisions to the program 
     improvement plan described in paragraph (1). Such further 
     revisions shall be accompanied by further technical 
     assistance from the Secretary.''.

     SEC. 207. STATE ADMINISTRATION.

       Section 221(1) of the Adult Education and Family Literacy 
     Act (20 U.S.C. 9221(1)) is amended by striking ``and 
     implementation'' and inserting ``implementation, and 
     monitoring''.

     SEC. 208. STATE DISTRIBUTION OF FUNDS; MATCHING REQUIREMENT.

       Section 222 of the Adult Education and Family Literacy Act 
     (20 U.S.C. 9222) is amended--
       (1) in subsection (a)--
       (A) in paragraph (1)--
       (i) by striking ``82.5'' the first place such term appears 
     and inserting ``80''; and
       (ii) by striking ``the 82.5 percent'' and inserting ``such 
     amount'';
       (B) in paragraph (2), by striking ``not more than 12.5 
     percent'' and inserting ``not more than 15 percent''; and
       (C) in paragraph (3), by striking ``$65,000'' and inserting 
     ``$75,000''; and
       (2) in subsection (b)(1), by striking ``equal to'' and 
     inserting ``that is not less than''.

     SEC. 209. STATE LEADERSHIP ACTIVITIES.

       Section 223 of the Adult Education and Family Literacy Act 
     (20 U.S.C. 9223) is amended--
       (1) in subsection (a)--
       (A) in the matter preceding paragraph (1), by inserting 
     ``to develop or enhance the adult education system of the 
     State or outlying area'' after ``activities'';
       (B) in paragraph (1), by striking ``instruction 
     incorporating'' and all that follows through the period and 
     inserting ``instruction incorporating the essential 
     components of reading instruction and instruction provided by 
     volunteers or by personnel of a State or outlying area.'';
       (C) in paragraph (2), by inserting ``, including 
     development and dissemination of instructional and 
     programmatic practices based on the most rigorous research 
     available in reading, writing, speaking, mathematics, English 
     language acquisition programs, distance learning, and staff 
     training'' after ``activities'';
       (D) in paragraph (5), by striking ``monitoring and'';
       (E) by striking paragraph (6) and inserting the following:
       ``(6) The development and implementation of technology 
     applications, translation technology, or distance learning, 
     including professional development to support the use of 
     instructional technology.''; and
       (F) by striking paragraph (7) through paragraph (11) and 
     inserting the following:
       ``(7) Coordination with--
       ``(A) other partners carrying out activities authorized 
     under this Act; and
       ``(B) existing support services, such as transportation, 
     child care, mental health services, and other assistance 
     designed to increase rates of enrollment in, and successful 
     completion of, adult education and literacy activities, for 
     adults enrolled in such activities.
       ``(8) Developing and disseminating curricula, including 
     curricula incorporating the essential components of reading 
     instruction as such components relate to adults.
       ``(9) The provision of assistance to eligible providers in 
     developing, implementing, and reporting measurable progress 
     in achieving the objectives of this subtitle.
       ``(10) The development and implementation of a system to 
     assist in the transition from adult basic education to 
     postsecondary education, including linkages with 
     postsecondary educational institutions.
       ``(11) Integration of literacy and English language 
     instruction with occupational skill training, and promoting 
     linkages with employers.
       ``(12) Activities to promote workplace literacy programs.
       ``(13) Activities to promote and complement local outreach 
     initiatives described in section 243(b)(3)(F).
       ``(14) In cooperation with efforts funded under sections 
     242 and 243, the development of curriculum frameworks and 
     rigorous content standards that--
       ``(A) specify what adult learners should know and be able 
     to do in the areas of reading and language arts, mathematics, 
     and English language acquisition; and
       ``(B) take into consideration the following:
       ``(i) State academic standards established under section 
     1111(b) of the Elementary and Secondary Education Act of 
     1965.
       ``(ii) The current adult skills and literacy assessments 
     used in the State or outlying area.
       ``(iii) The core indicators of performance established 
     under section 212(b)(2)(A).

[[Page 9581]]

       ``(iv) Standards and academic requirements for enrollment 
     in non-remedial, for-credit, courses in postsecondary 
     education institutions supported by the State or outlying 
     area.
       ``(v) Where appropriate, the basic and literacy skill 
     content of occupational and industry skill standards widely 
     used by business and industry in the State or outlying area.
       ``(15) In cooperation with efforts funded under sections 
     242 and 243, development and piloting of--
       ``(A) new assessment tools and strategies that--
       ``(i) are based on scientifically based research, where 
     available and appropriate; and
       ``(ii) identify the needs and capture the gains of students 
     at all levels, with particular emphasis on--

       ``(I) students at the lowest achievement level;
       ``(II) students who have limited English proficiency; and
       ``(III) adults with learning disabilities;

       ``(B) options for improving teacher quality and retention; 
     and
       ``(C) assistance in converting research into practice.
       ``(16) The development and implementation of programs and 
     services to meet the needs of adult learners with learning 
     disabilities or limited English proficiency.
       ``(17) Other activities of statewide significance that 
     promote the purpose of this title.''; and
       (2) in subsection (c), by striking ``being State- or 
     outlying area-imposed'' and inserting ``being imposed by the 
     State or outlying area''.

     SEC. 210. STATE PLAN.

       Section 224 of the Adult Education and Family Literacy Act 
     (20 U.S.C. 9224) is amended--
       (1) in subsection (a)--
       (A) by striking the heading and inserting ``4-Year Plans''; 
     and
       (B) in paragraph (1), by striking ``5'' and inserting 
     ``4'';
       (2) in subsection (b)--
       (A) in paragraph (1), by inserting ``and the role of 
     provider and cooperating agencies in preparing the 
     assessment'' after ``serve'';
       (B) by striking paragraph (2) and inserting the following:
       ``(2) a description of how the eligible agency will address 
     the adult education and literacy needs identified under 
     paragraph (1) in each workforce development area of the 
     State, using funds received under this subtitle, as well as 
     other Federal, State, or local funds received in partnership 
     with other agencies for the purpose of adult literacy as 
     applicable;'';
       (C) in paragraph (3)--
       (i) by inserting ``and measure'' after ``evaluate'';
       (ii) by inserting ``and improvement'' after 
     ``effectiveness''; and
       (iii) by striking ``212'' and inserting ``212, including--
       ``(A) how the eligible agency will evaluate and measure 
     annually such effectiveness on a grant-by-grant basis; and
       ``(B) how the eligible agency--
       ``(i) will hold eligible providers accountable regarding 
     the progress of such providers in improving the academic 
     achievement of participants in adult education programs under 
     this subtitle and regarding the core indicators of 
     performance described in section 212(b)(2)(A); and
       ``(ii) will use technical assistance, sanctions, and 
     rewards (including allocation of grant funds based on 
     performance and termination of grant funds based on 
     performance)'';
       (D) by redesignating paragraphs (5) through (12) as 
     paragraphs (6) through (13), respectively;
       (E) by inserting after paragraph (4) the following:
       ``(5) a description of how the eligible agency will improve 
     teacher quality, the professional development of eligible 
     providers, and instruction;'';
       (G) in paragraph (6) (as redesignated by subparagraph (D)), 
     by striking ``who'' and all that follows through the 
     semicolon and inserting ``that--
       ``(A) offers flexible schedules and coordinates with 
     necessary Federal, State, and local support services (such as 
     child care, transportation, mental health services, and case 
     management) to enable individuals, including individuals with 
     disabilities or individuals with other special needs, to 
     participate in adult education and literacy activities; and
       ``(B) attempts to coordinate with support services that are 
     not provided under this subtitle prior to using funds for 
     adult education and literacy activities provided under this 
     subtitle for support services;'';
       (H) in paragraph (10) (as redesignated by subparagraph 
     (D)), by striking ``plan;'' and inserting ``plan, which 
     process--
       ``(A) shall include the State Workforce Investment Board, 
     the Governor, State officials representing public schools, 
     community colleges, welfare agencies, agencies that provide 
     services to individuals with disabilities, other State 
     agencies that promote or operate adult education and literacy 
     activities, and direct providers of such adult literacy 
     services; and
       ``(B) may include consultation with the State agency for 
     higher education, institutions responsible for professional 
     development of adult education and literacy education program 
     instructors, institutions of higher education, 
     representatives of business and industry, refugee assistance 
     programs, and community-based organizations (as such term is 
     defined in section 101);'';
       (I) in paragraph (11) (as redesignated by subparagraph 
     (D))--
       (i) by inserting ``assess potential population needs and'' 
     after ``will'';
       (ii) in subparagraph (A), by striking ``students'' and 
     inserting ``individuals'';
       (iii) in subparagraph (C), by striking ``and'' after the 
     semicolon; and
       (iv) by adding at the end the following:
       ``(E) the unemployed; and
       ``(F) those individuals who are employed, but at levels 
     below self-sufficiency, as defined in section 101.'';
       (J) in paragraph (12) (as redesignated by subparagraph 
     (D))--
       (i) by inserting ``and how the plan submitted under this 
     subtitle is coordinated with the plan submitted by the State 
     under title I'' after ``eligible agency''; and
       (ii) by striking ``and'' after the semicolon;
       (K) in paragraph (13) (as redesignated by subparagraph 
     (D)), by striking ``231(c)(1).'' and inserting ``231(c)(1), 
     including--
       ``(A) how the State will build the capacity of 
     organizations that provide adult education and literacy 
     activities; and
       ``(B) how the State will increase the participation of 
     business and industry in adult education and literacy 
     activities;''; and
       (L) by adding at the end the following:
       ``(14) a description of how the eligible agency will 
     consult with any State agency responsible for postsecondary 
     education to develop adult education programs and services 
     (including academic skill development and support services) 
     that prepare students to enter postsecondary education upon 
     the attainment of a secondary school diploma or its 
     recognized equivalent;
       ``(15) a description of how the eligible agency will 
     consult with the State agency responsible for workforce 
     development to develop adult education programs and services 
     that are designed to prepare students to enter the workforce; 
     and
       ``(16) a description of how the eligible agency will 
     improve the professional development of eligible providers of 
     adult education and literacy activities.'';
       (3) in subsection (c), by adding at the end the following: 
     ``At the end of the first 2-year period of the 4-year State 
     plan, the eligible agency shall review and, as needed, revise 
     the 4-year State plan.''; and
       (4) in subsection (d)--
       (A) in paragraph (1), by inserting ``, the chief State 
     school officer, the State officer responsible for 
     administering community and technical colleges, and the State 
     Workforce Investment Board'' after ``Governor''; and
       (B) in paragraph (2), by striking ``comments'' and all that 
     follows through the period and inserting ``comments regarding 
     the State plan by the Governor, the chief State school 
     officer, the State officer responsible for administering 
     community and technical colleges, and the State Workforce 
     Investment Board, and any revision to the State plan, are 
     submitted to the Secretary.''.

     SEC. 211. PROGRAMS FOR CORRECTIONS EDUCATION AND OTHER 
                   INSTITUTIONALIZED INDIVIDUALS.

       Section 225 of the Adult Education and Family Literacy Act 
     (20 U.S.C. 9225) is amended--
       (1) in subsection (b)--
       (A) in paragraph (1), by striking ``basic education'' and 
     inserting ``adult education and literacy activities'';
       (B) in paragraph (2), by inserting ``and'' after the 
     semicolon;
       (C) by striking paragraph (3); and
       (D) by redesignating paragraph (4) as paragraph (3); and
       (2) in subsection (d), by striking ``Definition of Criminal 
     Offender.--'' and inserting ``Definitions.--In this 
     section:''.

     SEC. 212. GRANTS AND CONTRACTS FOR ELIGIBLE PROVIDERS.

       Section 231 of the Adult Education and Family Literacy Act 
     (20 U.S.C. 9241) is amended--
       (1) in subsection (b)--
       (A) in paragraph (1), by striking ``workplace literacy 
     services'' and inserting ``workplace literacy programs''; and
       (B) in paragraph (3), by striking ``literacy'' and 
     inserting ``language acquisition''; and
       (2) in subsection (e)--
       (A) in paragraph (1), by inserting ``to be achieved 
     annually on the core indicators of performance and employment 
     performance indicators described in section 212(b)(2)'' after 
     ``outcomes'';
       (B) by striking paragraph (3) and inserting the following:
       ``(3) the commitment of the eligible provider to be 
     responsive to local needs and to serve individuals in the 
     community who were identified by the assessment as most in 
     need of adult literacy services, including individuals who 
     are low-income, have minimal literacy skills, have learning 
     disabilities, or have limited English proficiency;'';

[[Page 9582]]

       (C) in paragraph (4)(B), by striking ``, such as'' and all 
     that follows through the semicolon and inserting ``that 
     include the essential components of reading instruction;'';
       (D) in paragraph (5), by striking ``research'' and 
     inserting ``the most rigorous research available, including 
     scientifically based research,'';
       (E) in paragraph (7), by inserting ``, when appropriate and 
     based on the most rigorous research available, including 
     scientifically based research,'' after ``real life 
     contexts'';
       (F) in paragraph (9), by inserting ``education, job 
     training, and social service'' after ``other available'';
       (G) in paragraph (10)--
       (i) by inserting ``coordination with Federal, State, and 
     local'' after ``schedules and''; and
       (ii) by striking ``and transportation'' and inserting ``, 
     transportation, mental health services, and case 
     management'';
       (H) in paragraph (11)--
       (i) by inserting ``measurable'' after ``report'';
       (ii) by striking ``eligible agency'';
       (iii) by inserting ``established by the eligible agency'' 
     after ``performance measures''; and
       (iv) by striking ``and'' after the semicolon;
       (I) in paragraph (12), by striking ``literacy programs.'' 
     and inserting ``language acquisition programs and civics 
     education programs;''; and
       (J) by adding at the end the following:
       ``(13) the capacity of the eligible provider to produce 
     information on performance results, including enrollments and 
     measurable participant outcomes;
       ``(14) whether reading, writing, speaking, mathematics, and 
     English language acquisition instruction provided by the 
     eligible provider are based on the best practices derived 
     from the most rigorous research available;
       ``(15) whether the eligible provider's applications of 
     technology and services to be provided are sufficient to 
     increase the amount and quality of learning and lead to 
     measurable learning gains within specified time periods; and
       ``(16) the capacity of the eligible provider to serve adult 
     learners with learning disabilities.''.

     SEC. 213. LOCAL APPLICATION.

       Section 232 of the Adult Education and Family Literacy Act 
     (20 U.S.C. 9242) is amended--
       (1) in paragraph (1)--
       (A) by inserting ``consistent with the requirements of this 
     subtitle'' after ``spent''; and
       (B) by striking ``and'' after the semicolon;
       (2) in paragraph (2), by striking the period at the end and 
     inserting ``; and''; and
       (3) by adding at the end the following:
       ``(3) information that addresses each of the considerations 
     required under section 231(e).''.

     SEC. 214. LOCAL ADMINISTRATIVE COST LIMITS.

       Section 233 of the Adult Education and Family Literacy Act 
     (20 U.S.C. 9243) is amended--
       (1) in subsection (a)(2)--
       (A) by inserting ``and professional'' after ``personnel''; 
     and
       (B) by inserting ``development of measurable goals in 
     reading, writing, and speaking the English language, and in 
     mathematical computation,'' after ``development,''; and
       (2) in subsection (b)--
       (A) by inserting ``and professional'' after ``personnel''; 
     and
       (B) by inserting ``development of measurable goals in 
     reading, writing, and speaking the English language, and in 
     mathematical computation,'' after ``development,''.

     SEC. 215. ADMINISTRATIVE PROVISIONS.

       Section 241(b) of the Adult Education and Family Literacy 
     Act (20 U.S.C. 9251(b)) is amended--
       (1) in paragraph (1)(A)--
       (A) by striking ``adult education and literacy activities'' 
     each place the term appears and inserting ``activities under 
     this subtitle''; and
       (B) by striking ``was'' and inserting ``were''; and
       (2) in paragraph (4)--
       (A) by inserting ``not more than'' after ``this subsection 
     for''; and
       (B) by striking ``only''.

     SEC. 216. NATIONAL INSTITUTE FOR LITERACY.

       Section 242 of the Adult Education and Family Literacy Act 
     (20 U.S.C. 9252) is amended--
       (1) in subsection (a)--
       (A) in paragraph (1), by striking ``literacy'' and 
     inserting ``effective literacy programs for children, youth, 
     adults, and families'';
       (B) in paragraph (2), by inserting ``and disseminates 
     information on'' after ``coordinates''; and
       (C) by striking paragraph (3)(A) and inserting the 
     following:
       ``(A) coordinating and participating in the Federal effort 
     to identify and disseminate information on literacy that is 
     derived from scientifically based research, or the most 
     rigorous research available, and effective programs that 
     serve children, youth, adults, and families; and'';
       (2) by striking subsection (b)(3) and inserting the 
     following:
       ``(3) Recommendations.--The Interagency Group, in 
     consultation with the National Institute for Literacy 
     Advisory Board (in this section referred to as the `Board') 
     established under subsection (e), shall plan the goals of the 
     Institute and the implementation of any programs to achieve 
     the goals. The Board may also request a meeting of the 
     Interagency Group to discuss any recommendations the Board 
     may make.'';
       (3) in subsection (c)--
       (A) in paragraph (1)--
       (i) in subparagraph (A)--

       (I) by striking ``to establish'' and inserting ``to 
     maintain'';
       (II) in clause (i), by striking ``phonemic awareness, 
     systematic phonics, fluency, and reading comprehension'' and 
     inserting ``the essential components of reading 
     instruction'';
       (III) in clause (iii), by striking ``and'' after the 
     semicolon;
       (IV) in clause (iv), by inserting ``and'' after the 
     semicolon; and
       (V) by adding at the end the following:

       ``(v) a list of local adult education and literacy 
     programs;'';
       (ii) in subparagraph (C)--

       (I) by striking ``reliable and replicable research'' and 
     inserting ``reliable and replicable research as defined by 
     the Institute of Education Sciences''; and
       (II) by striking ``especially with the Office of 
     Educational Research and Improvement in the Department of 
     Education,'';

       (iii) in subparagraph (D), by striking ``phonemic 
     awareness, systematic phonics, fluency, and reading 
     comprehension based on'' and inserting ``the essential 
     components of reading instruction and'';
       (iv) in subparagraph (H), by striking ``and'' after the 
     semicolon;
       (v) in subparagraph (I), by striking the period at the end 
     and inserting a semicolon; and
       (vi) by adding at the end the following:
       ``(J) to work cooperatively with the Department of 
     Education to assist States that are pursuing the 
     implementation of standards-based educational improvements 
     for adults through the dissemination of training, technical 
     assistance, and related support and through the development 
     and dissemination of related standards-based assessment 
     instruments; and
       ``(K) to identify scientifically based research where 
     available, or the most rigorous research available, on the 
     effectiveness of instructional practices and organizational 
     strategies relating to literacy programs on the acquisition 
     of skills in reading, writing, English acquisition, and 
     mathematics.''; and
       (B) by adding at the end the following:
       ``(3) Coordination.--In identifying the reliable and 
     replicable research the Institute will support, the Institute 
     shall use standards for research quality that are consistent 
     with those of the Institute of Education Sciences.'';
       (4) in subsection (e)--
       (A) in paragraph (1)(B)--
       (i) in clause (i), by striking ``literacy programs'' and 
     inserting ``language acquisition programs'';
       (ii) in clause (ii), by striking ``literacy programs'' and 
     inserting ``or have participated in or partnered with 
     workplace literacy programs'';
       (iii) in clause (iv), by inserting ``, including adult 
     literacy research'' after ``research'';
       (iv) in clause (vi), by striking ``and'' after the 
     semicolon;
       (v) in clause (vii), by striking the period at the end and 
     inserting ``; and''; and
       (vi) by adding at the end the following:
       ``(viii) institutions of higher education.'';
       (B) in paragraph (2)--
       (i) in subparagraph (B), by striking ``and'' after the 
     semicolon;
       (ii) in subparagraph (C), by striking the period at the end 
     and inserting ``; and''; and
       (iii) by adding at the end the following:
       ``(D) review the biennial report submitted to Congress 
     pursuant to subsection (k).''; and
       (C) in paragraph (5), by striking the second sentence and 
     inserting the following: ``A recommendation of the Board may 
     be passed only by a majority of the Board's members present 
     at a meeting for which there is a quorum.''; and
       (5) in subsection (k)--
       (A) by striking ``Labor and Human Resources'' and inserting 
     ``Health, Education, Labor, and Pensions''; and
       (B) by striking ``The Institute shall submit a report 
     biennially to'' and inserting ``Not later than 1 year after 
     the date of enactment of the Adult Education and Family 
     Literacy Act Amendments of 2005, and biennially thereafter, 
     the Institute shall submit a report to''.

     SEC. 217. NATIONAL LEADERSHIP ACTIVITIES.

       Section 243 of the Adult Education and Family Literacy Act 
     (20 U.S.C. 9253) is amended to read as follows:

     ``SEC. 243. NATIONAL LEADERSHIP ACTIVITIES.

       ``(a) In General.--The Secretary shall establish and carry 
     out a program of national leadership activities to enhance 
     the quality of adult education and literacy programs 
     nationwide.
       ``(b) Permissive Activities.--The national leadership 
     activities described in subsection (a) may include the 
     following:
       ``(1) Technical assistance, including--
       ``(A) assistance provided to eligible providers in 
     developing and using performance measures for the improvement 
     of adult education and literacy activities, including family 
     literacy services;

[[Page 9583]]

       ``(B) assistance related to professional development 
     activities, and assistance for the purposes of developing, 
     improving, identifying, and disseminating the most successful 
     methods and techniques for providing adult education and 
     literacy activities, including family literacy services, 
     based on scientific evidence where available;
       ``(C) assistance in distance learning and promoting and 
     improving the use of technology in the classroom;
       ``(D) assistance in developing valid, measurable, and 
     reliable performance data, including data about employment 
     and employment outcome, and using performance information for 
     the improvement of adult education and literacy programs; and
       ``(E) assistance to help States, particularly low-
     performing States, meet the requirements of section 212.
       ``(2) A program of grants, contracts, or cooperative 
     agreements awarded on a competitive basis to national, 
     regional, or local networks of private nonprofit 
     organizations, public libraries, or institutions of higher 
     education to build the capacity of such networks' members to 
     meet the performance requirements of eligible providers under 
     this title and involve adult learners in program improvement.
       ``(3) Funding national leadership activities that are not 
     described in paragraph (1), either directly or through 
     grants, contracts, or cooperative agreements awarded on a 
     competitive basis to or with postsecondary educational 
     institutions, public or private organizations or agencies, or 
     consortia of such institutions, organizations, or agencies, 
     such as--
       ``(A) developing, improving, and identifying the most 
     successful methods and techniques for addressing the 
     education needs of adults, including instructional practices 
     using the essential components of reading instruction based 
     on the work of the National Institute of Child Health and 
     Human Development;
       ``(B) increasing the effectiveness of, and improving the 
     quality of, adult education and literacy activities, 
     including family literacy services;
       ``(C) carrying out rigorous research, including 
     scientifically based research where appropriate, on national 
     literacy basic skill acquisition for adult learning, 
     including estimating the number of adults functioning at the 
     lowest levels of literacy proficiency;
       ``(D)(i) carrying out demonstration programs;
       ``(ii) disseminating best practices information, including 
     information regarding promising practices resulting from 
     federally funded demonstration programs; and
       ``(iii) developing and replicating best practices and 
     innovative programs, including--
       ``(I) the development of models for basic skill 
     certificates;
       ``(II) the identification of effective strategies for 
     working with adults with learning disabilities and with 
     adults with limited English proficiency;
       ``(III) integrated basic and workplace skills education 
     programs;
       ``(IV) coordinated literacy and employment services; and
       ``(V) postsecondary education transition programs;
       ``(E) providing for the conduct of an independent 
     evaluation and assessment of adult education and literacy 
     activities through studies and analyses conducted 
     independently through grants and contracts awarded on a 
     competitive basis, which evaluation and assessment shall 
     include descriptions of--
       ``(i) the effect of performance measures and other measures 
     of accountability on the delivery of adult education and 
     literacy activities, including family literacy services;
       ``(ii) the extent to which the adult education and literacy 
     activities, including family literacy services, increase the 
     literacy skills of adults (and of children, in the case of 
     family literacy services), lead the participants in such 
     activities to involvement in further education and training, 
     enhance the employment and earnings of such participants, 
     and, if applicable, lead to other positive outcomes, such as 
     reductions in recidivism in the case of prison-based adult 
     education and literacy activities;
       ``(iii) the extent to which the provision of support 
     services to adults enrolled in adult education and family 
     literacy programs increase the rate of enrollment in, and 
     successful completion of, such programs; and
       ``(iv) the extent to which different types of providers 
     measurably improve the skills of participants in adult 
     education and literacy programs;
       ``(F) supporting efforts aimed at capacity building of 
     programs at the State and local levels such as technical 
     assistance in program planning, assessment, evaluation, and 
     monitoring of activities carried out under this subtitle;
       ``(G) collecting data, such as data regarding the 
     improvement of both local and State data systems, through 
     technical assistance and development of model performance 
     data collection systems;
       ``(H) supporting the development of an entity that would 
     produce and distribute technology-based programs and 
     materials for adult education and literacy programs using an 
     interconnection system (as defined in section 397 of the 
     Communications Act of 1934 (47 U.S.C. 397)) and expand the 
     effective outreach and use of such programs and materials to 
     adult education eligible providers;
       ``(I) determining how participation in adult education and 
     literacy activities prepares individuals for entry into 
     postsecondary education and employment and, in the case of 
     prison-based services, has an effect on recidivism; and
       ``(J) other activities designed to enhance the quality of 
     adult education and literacy activities nationwide.''.

     SEC. 218. INTEGRATED ENGLISH LITERACY AND CIVICS EDUCATION.

       Chapter 4 of subtitle A of title II (29 U.S.C. 9251 et 
     seq.) is amended by adding at the end the following:

     ``SEC. 244. INTEGRATED ENGLISH LITERACY AND CIVICS EDUCATION.

       ``(a) In General.--From funds made available under section 
     211(a)(4) for each fiscal year, the Secretary shall award 
     grants to States, from allotments under subsection (b), for 
     integrated English literacy and civics education.
       ``(b) Allotment.--
       ``(1) In general.--Subject to paragraph (2), from amounts 
     made available under section 211(a)(4) for a fiscal year, the 
     Secretary shall allocate--
       ``(A) 65 percent to the States on the basis of a State's 
     need for integrated English literacy and civics education as 
     determined by calculating each State's share of a 10-year 
     average of the Immigration and Naturalization Service data 
     for immigrants admitted for legal permanent residence for the 
     10 most recent years; and
       ``(B) 35 percent to the States on the basis of whether the 
     State experienced growth as measured by the average of the 3 
     most recent years for which Immigration and Naturalization 
     Service data for immigrants admitted for legal permanent 
     residence are available.
       ``(2) Minimum.--No State shall receive an allotment under 
     paragraph (1) in an amount that is less than $60,000.''.

     SEC. 219. TRANSITION.

       The Secretary shall take such steps as the Secretary 
     determines to be appropriate to provide for the orderly 
     transition to the authority of the Adult Education and Family 
     Literacy Act (as amended by this title) from any authority 
     under provisions of the Adult Education and Family Literacy 
     Act (as such Act was in effect on the day before the date of 
     enactment of the Adult Education and Family Literacy Act 
     Amendments of 2005).

            TITLE III--AMENDMENTS TO OTHER PROVISIONS OF LAW

     SEC. 301. WAGNER-PEYSER ACT.

       (a) Conforming Amendment.--Section 2(3) of the Wagner-
     Peyser Act (29 U.S.C. 49a(3)) is amended by striking 
     ``section 134(c)'' and inserting ``section 121(e)''.
       (b) Colocation.--Section 3 of the Wagner-Peyser Act (29 
     U.S.C. 49b) is amended by adding at the end the following:
       ``(d) In order to avoid duplication of services and enhance 
     integration of services, employment services offices in each 
     State shall be colocated with one-stop centers established 
     under title I of the Workforce Investment Act of 1998 (29 
     U.S.C. 2801 et seq.).
       ``(e) The Secretary, in consultation with States, is 
     authorized to assist in the development of national 
     electronic tools that may be used to improve access to 
     workforce information for individuals through--
       ``(1) the one-stop delivery systems established under 
     section 121(e) of the Workforce Investment Act of 1998 (29 
     U.S.C. 2841(e)); and
       ``(2) such other delivery systems as the Secretary 
     determines to be appropriate.''.
       (c) Cooperative Statistical Program.--Section 14 of the 
     Wagner-Peyser Act (29 U.S.C. 49l-1) is amended by striking 
     the section heading and all that follows through ``There'' 
     and inserting the following:

     ``SEC. 14. COOPERATIVE STATISTICAL PROGRAM.

       ``There''.
       (d) Workforce and Labor Market Information System.--Section 
     15 of the Wagner-Peyser Act (29 U.S.C. 49l-2) is amended--
       (1) by striking the section heading and inserting the 
     following:

     ``SEC. 15. WORKFORCE AND LABOR MARKET INFORMATION SYSTEM.'';

       (2) by striking ``employment statistics system'' each place 
     it appears and inserting ``workforce and labor market 
     information system'';
       (3) in subsection (a)(1), by striking ``of employment 
     statistics'';
       (4) in subsection (b)--
       (A) in paragraph (1)--
       (i) by striking ``The'' and inserting the following:
       ``(A) Structure.--The''; and
       (ii) by adding at the end the following:
       ``(B) Grants or cooperative agreements.--
       ``(i) In general.--The Secretary shall carry out the 
     provisions of this section in a timely manner through grants 
     or cooperative agreements with States.
       ``(ii) Distribution of funds.--With regard to distributing 
     funds appropriated under subsection (g) (relating to 
     workforce and labor market information funding) for fiscal 
     years 2006 through 2011, the Secretary shall continue to 
     distribute the funds to States in the manner in which the 
     Secretary distributed funds to the States under this section 
     for fiscal years 1999 through 2003.''; and

[[Page 9584]]

       (B) in paragraph (2)(E)--
       (i) in clause (i), by adding ``and'' at the end;
       (ii) in clause (ii), by striking ``; and'' and inserting a 
     period; and
       (iii) by striking clause (iii);
       (5) by striking subsections (c) and (d) and inserting the 
     following:
       ``(c) Two-Year Plan.--The Secretary, working through the 
     Commissioner of Labor Statistics, and in cooperation with the 
     States and with the assistance of the Assistant Secretary for 
     Employment and Training and heads of other appropriate 
     Federal agencies, shall prepare a 2-year plan which shall be 
     the mechanism for achieving cooperative management of the 
     nationwide workforce and labor market information system 
     described in subsection (a) and the statewide workforce and 
     labor market information systems that comprise the nationwide 
     system. The plan shall--
       ``(1) describe the steps the to be taken in the following 2 
     years to carry out the duties described in subsection (b)(2);
       ``(2) evaluate the performance of the system and recommend 
     needed improvements, with particular attention to the 
     improvements needed at the State and local levels; and
       ``(3) describe the involvement of States in the development 
     of the plan, through consultation between the Secretary and 
     representatives from State agencies in accordance with 
     subsection (d).
       ``(d) Coordination With the States.--The Secretary, working 
     though the Commissioner of Labor Statistics and in 
     coordination with the Assistant Secretary for Employment and 
     Training, shall consult at least annually with 
     representatives of each of the Federal regions of the 
     Department of Labor, elected (pursuant to a process 
     established by the Secretary) by and from the State workforce 
     and labor market information directors affiliated with the 
     State agencies that perform the duties described in 
     subsection (e)(2).'';
       (6) in subsection (e)(2)--
       (A) in subparagraph (G), by adding ``and'' at the end;
       (B) by striking subparagraph (H); and
       (C) by redesignating subparagraph (I) as subparagraph (H); 
     and
       (7) in subsection (g), by striking ``1999 through 2004'' 
     and inserting ``2006 through 2011''.

                TITLE IV--REHABILITATION ACT AMENDMENTS

     SEC. 401. SHORT TITLE.

       This title may be cited as the ``Rehabilitation Act 
     Amendments of 2005''.

     SEC. 402. TECHNICAL AMENDMENTS TO TABLE OF CONTENTS.

       (a) Expanded Transition Services.--Section 1(b) of the 
     Rehabilitation Act of 1973 is amended by inserting after the 
     item relating to section 110 the following:

``Sec. 110A. Reservation for expanded transition services.''.

       (b) Incentive Grants.--Section 1(b) of the Rehabilitation 
     Act of 1973 is amended by inserting after the item relating 
     to section 112 the following:

``Sec. 113. Incentive grants.''.

       (c) Independent Living Services for Older Individuals Who 
     Are Blind.--Section 1(b) of the Rehabilitation Act of 1973 is 
     amended by striking the items relating to sections 752 and 
     753 and inserting the following:

``Sec. 752. Training and technical assistance.
``Sec. 753. Program of grants.
``Sec. 754. Authorization of appropriations.''.

     SEC. 403. PURPOSE.

       Section 2 of the Rehabilitation Act of 1973 (29 U.S.C. 701) 
     is amended--
       (1) in subsection (a)--
       (A) in paragraph (5), by striking ``and'' after the 
     semicolon;
       (B) in paragraph (6), by striking the period at the end and 
     inserting ``; and''; and
       (C) by adding at the end the following:
       ``(7)(A) a high proportion of youth who are individuals 
     with disabilities is leaving special education without being 
     employed or being enrolled in continuing education; and
       ``(B) there is a substantial need to support those youth as 
     the youth transition from school to postsecondary life.''; 
     and
       (2) in subsection (b)--
       (A) in paragraph (1)(F), by striking ``and'' after the 
     semicolon;
       (B) in paragraph (2), by striking the period at the end and 
     inserting ``; and''; and
       (C) by adding at the end the following:
       ``(3) to provide opportunities for employers and vocational 
     rehabilitation service providers to provide meaningful input 
     at all levels of government to ensure successful employment 
     of individuals with disabilities.''.

     SEC. 404. DEFINITIONS.

       Section 7 of the Rehabilitation Act of 1973 (29 U.S.C. 705) 
     is amended--
       (1) in paragraph (2)(B)--
       (A) in the matter preceding clause (i), by inserting ``and 
     literacy services'' after ``supported employment''; and
       (B) in clause (iii), by inserting ``and literacy skills'' 
     after ``educational achievements'';
       (2) by striking paragraphs (3) and (4) and inserting the 
     following:
       ``(3) Assistive technology definitions.--
       ``(A) Assistive technology.--The term `assistive 
     technology' has the meaning given such term in section 3 of 
     the Assistive Technology Act of 1998 (29 U.S.C. 3002).
       ``(B) Assistive technology device.--The term `assistive 
     technology device' has the meaning given such term in section 
     3 of the Assistive Technology Act of 1998, except that the 
     reference in such section to the term `individuals with 
     disabilities' shall be deemed to mean more than one 
     individual with a disability as defined in paragraph (20)(A).
       ``(C) Assistive technology service.--The term `assistive 
     technology service' has the meaning given such term in 
     section 3 of the Assistive Technology Act of 1998, except 
     that the reference in such section--
       ``(i) to the term `individual with a disability' shall be 
     deemed to mean an individual with a disability, as defined in 
     paragraph (20)(A); and
       ``(ii) to the term `individuals with disabilities' shall be 
     deemed to mean more than one such individual.'';
       (3) by striking paragraph (7) and inserting the following:
       ``(7) Consumer organization.--The term `consumer 
     organization' means a membership organization in which a 
     majority of the organization's members and a majority of the 
     organization's officers are individuals with disabilities.'';
       (4) in paragraph (17)--
       (A) in subparagraph (C), by striking ``and'' after the 
     semicolon;
       (B) in subparagraph (D), by striking the period at the end 
     and inserting ``; and''; and
       (C) by adding at the end the following:
       ``(E) maintaining individuals with significant disabilities 
     in, or transitioning individuals with significant 
     disabilities to, community-based living.'';
       (5) by redesignating paragraphs (24) through (28), (29) 
     through (34), (35) through (37), and (38) through (39), as 
     paragraphs (25) through (29), (31) through (36), (38) through 
     (40), and (42) through (43), respectively;
       (6) by inserting after paragraph (23) the following:
       ``(24) Literacy.--The term `literacy' has the meaning given 
     the term in section 203 of the Adult Education and Family 
     Literacy Act (20 U.S.C. 9202).'';
       (7) by inserting after paragraph (29), as redesignated by 
     paragraph (5), the following:
       ``(30) Post-employment service.--The term `post-employment' 
     service means a service identified in section 103(a) that 
     is--
       ``(A) provided subsequent to the achievement of an 
     employment outcome; and
       ``(B) necessary for an individual to maintain, regain, or 
     advance in employment, consistent with the individual's 
     strengths, resources, priorities, concerns, abilities, 
     capabilities, interests, and informed choice.'';
       (8) by inserting after paragraph (36), as redesignated by 
     paragraph (5), the following:
       ``(37) Student with a disability.--
       ``(A) In general.--The term `student with a disability' 
     means an individual with a disability who attends an 
     elementary school or secondary school and who--
       ``(i) is not younger than 16 years of age;
       ``(ii) is not older than 22 years of age;
       ``(iii) has been determined to be eligible under section 
     102(a) for assistance under title I; and
       ``(iv)(I) is eligible for, and receiving, special education 
     or related services under part B of the Individuals with 
     Disabilities Education Act (20 U.S.C. 1411 et seq.); or
       ``(II) is an individual with a disability, for purposes of 
     section 504.
       ``(B) Students with disabilities.--The term `students with 
     disabilities' means more than 1 student with a disability.'';
       (9) in paragraph (38)(A)(ii), as redesignated by paragraph 
     (5), by striking ``paragraph (36)(C)'' and inserting 
     ``paragraph (39)(C)''; and
       (10) by inserting after paragraph (40), as redesignated by 
     paragraph (5), the following:
       ``(41) Transition services expansion year.--The term 
     `transition services expansion year' means--
       ``(A) the first fiscal year for which the amount 
     appropriated under section 100(b) exceeds the amount 
     appropriated under section 100(b) for fiscal year 2006 by not 
     less than $100,000,000; and
       ``(B) each fiscal year subsequent to that first fiscal 
     year.''.

     SEC. 405. ADMINISTRATION OF THE ACT.

       Section 12(a)(1) of the Rehabilitation Act of 1973 (29 
     U.S.C. 709(a)(1)) is amended--
       (1) by inserting ``(A)'' after ``(1)'';
       (2) by adding at the end the following:
       ``(B) provide technical assistance to the designated State 
     units on developing successful partnerships with local and 
     multi-State businesses in an effort to employ individuals 
     with disabilities; and
       ``(C) provide technical assistance on developing self-
     employment opportunities and outcomes for individuals with 
     disabilities;''.

     SEC. 406. REPORTS.

       Section 13 of the Rehabilitation Act of 1973 (29 U.S.C. 
     710) is amended by adding at the end the following:
       ``(d)(1)(A) The Commissioner shall ensure that the reports, 
     information, and data described in subparagraph (B) will be 
     posted in a timely manner on the website of the Department of 
     Education, in order to inform the public about the 
     administration and performance of programs in each State 
     under this Act.

[[Page 9585]]

       ``(B) The reports, information, and data referred to in 
     subparagraph (A) shall consist of--
       ``(i) reports submitted by a designated State unit under 
     this Act;
       ``(ii) accountability information (including State 
     performance information relating to evaluation standards and 
     performance indicators under section 106 and State 
     performance information relating to State performance 
     measures under section 136 of the Workforce Investment Act of 
     1998 (29 U.S.C. 2871)) submitted by a designated State unit 
     under this Act or submitted under such section 136;
       ``(iii) data collected from each designated State unit 
     under this Act with the approval of the Office of Management 
     and Budget; and
       ``(iv) monitoring reports conducted under this Act.
       ``(C) The Commissioner shall maintain, and post on the 
     website, a listing of the reports, information, and data 
     required to be submitted by designated State units under this 
     Act.
       ``(D) The Commissioner shall post on the website, or 
     establish links on the website to, evaluations, studies, and 
     audits, including evaluations, studies, and audits conducted 
     by agencies of the Federal government, concerning programs 
     carried out under this Act.
       ``(E) The Commissioner shall maintain on the website a list 
     of the designated State units and shall establish links on 
     the website to websites maintained by those units.
       ``(2) The Commissioner shall maintain public use read-only 
     access to the State and aggregated reports and analyzed data 
     filed and maintained on the Rehabilitation Services 
     Administration management information system or a similar 
     system maintained by the Department of Education.''.

     SEC. 407. CARRYOVER.

       Section 19 of the Rehabilitation Act of 1973 (29 U.S.C. 
     716) is amended--
       (1) in subsection (a)(1)--
       (A) by striking ``, section 509 (except as provided in 
     section 509(b))'';
       (B) by striking ``or C''; and
       (C) by striking ``752(b)'' and inserting ``753(b)''; and
       (2) by adding at the end the following:
       ``(c) Client Assistance Program; Protection and Advocacy of 
     Individual Rights.--
       ``(1) Appropriated amounts.--Notwithstanding any other 
     provision of law, any funds appropriated for a fiscal year to 
     carry out a grant program under section 112 or 509 (except as 
     provided in section 509(b)), including any funds reallotted 
     under such grant program, that are not obligated and expended 
     by recipients prior to the beginning of the succeeding fiscal 
     year shall remain available for obligation and expenditure by 
     such recipients during such succeeding fiscal year.
       ``(2) Program income.--Notwithstanding any other provision 
     of law, any amounts of program income received by recipients 
     under a grant program under section 112 or 509 in a fiscal 
     year that are not obligated and expended by recipients prior 
     to the beginning of the succeeding fiscal year, shall remain 
     available until expended.''.

             Subtitle A--Vocational Rehabilitation Services

     SEC. 411. DECLARATION OF POLICY; AUTHORIZATION OF 
                   APPROPRIATIONS.

       Section 100(b)(1) of the Rehabilitation Act of 1973 (29 
     U.S.C. 720(b)(1)) is amended by striking ``fiscal years 1999 
     through 2003'' and inserting ``fiscal years 2006 through 
     2011''.

     SEC. 412. STATE PLANS.

       (a) In General.--Section 101(a) of the Rehabilitation Act 
     of 1973 (29 U.S.C. 721(a)) is amended--
       (1) in paragraph (2), by adding at the end the following:
       ``(D) State agency for reimbursement purposes.--A governing 
     body of an Indian tribe that receives a grant under section 
     121 shall be considered, for purposes of the cost 
     reimbursement provisions--
       ``(i) in section 222(d)(1) of the Social Security Act (42 
     U.S.C. 422(d)(1)), to be a State; and
       ``(ii) in subsections (d) and (e) of section 1615 of the 
     Social Security Act (42 U.S.C. 1382d), to be a State agency 
     described in subsection (d) of that section.'';
       (2) in paragraph (6)(B), by striking ``to employ and 
     advance in employment'' and inserting ``to recruit, employ, 
     and advance in employment'';
       (3) in paragraph (7)(A)(v), by striking subclause (I) and 
     inserting the following:

       ``(I) a system for the continuing education of 
     rehabilitation professionals and paraprofessionals within the 
     designated State unit, particularly with respect to 
     rehabilitation technology, including training implemented in 
     coordination with State programs carried out under section 4 
     of the Assistive Technology Act of 1998 (29 U.S.C. 3003); 
     and'';

       (4) in paragraph (10)--
       (A) in subparagraph (B), by striking ``annual reporting on 
     the eligible individuals receiving the services, on those 
     specific data elements described in section 136(d)(2) of the 
     Workforce Investment Act of 1998'' and inserting ``annual 
     reporting of information on eligible individuals receiving 
     the services that is needed to assess performance on the core 
     indicators of performance described in section 
     136(b)(2)(A)(i) of the Workforce Investment Act of 1998 (29 
     U.S.C. 2871(b)(2)(A)(i))'';
       (B) in subparagraph (C), by striking clauses (iii) and (iv) 
     and inserting the following:
       ``(iii) the number of applicants and eligible recipients, 
     including the number of individuals with significant 
     disabilities, who exited the program carried out under this 
     title and the number of such individuals who achieved 
     employment outcomes after receiving vocational rehabilitation 
     services; and
       ``(iv) the number of individuals who received vocational 
     rehabilitation services who entered and retained employment 
     and the earnings of such individuals, as such entry, 
     retention, and earnings are defined for purposes of the core 
     indicators of performance described in section 
     136(b)(2)(A)(i) of the Workforce Investment Act of 1998 (29 
     U.S.C. 2871(b)(2)(A)(i)).''; and
       (C) in subparagraph (E)(ii), by striking ``in meeting'' and 
     all that follows through the period and inserting ``in 
     meeting the standards and indicators established pursuant to 
     section 106.'';
       (5) in paragraph (11)--
       (A) by striking subparagraph (C) and inserting the 
     following:
       ``(C) Interagency cooperation with other agencies.--The 
     State plan shall include descriptions of interagency 
     cooperation with, and utilization of the services and 
     facilities of, Federal, State, and local agencies and 
     programs, including the State programs carried out under 
     section 4 of the Assistive Technology Act of 1998 (29 U.S.C. 
     3003), programs carried out by the Under Secretary for Rural 
     Development of the Department of Agriculture, and State use 
     contracting programs, to the extent that such agencies and 
     programs are not carrying out activities through the 
     statewide workforce investment system.'';
       (B) by striking subparagraph (D)(ii) and inserting the 
     following:
       ``(ii) transition planning by personnel of the designated 
     State agency and the State educational agency that will 
     facilitate the development and completion of the 
     individualized education programs under section 614(d) of the 
     Individuals with Disabilities Education Act (20 U.S.C. 
     1414(d)) and, as appropriate, the development and completion 
     of the individualized plan for employment, in order to 
     achieve post-school employment outcomes of students with 
     disabilities;''; and
       (C) by adding at the end the following:
       ``(G) Coordination with assistive technology programs.--The 
     State plan shall include an assurance that the designated 
     State unit, and the lead agency and implementing agency (if 
     any) designated by the Governor of the State under section 4 
     of the Assistive Technology Act of 1998 (29 U.S.C. 3003), 
     have developed working relationships and will enter into 
     agreements for the coordination of their activities, 
     including the referral of individuals with disabilities to 
     programs and activities described in that section.
       ``(H) Coordination with ticket to work and self-sufficiency 
     program.--The State plan shall include an assurance that the 
     designated State unit will coordinate activities with any 
     other State agency that is functioning as an employment 
     network under the Ticket to Work and Self-Sufficiency Program 
     established under section 1148 of the Social Security Act (42 
     U.S.C. 1320b-19).'';
       (6) in paragraph (15)--
       (A) in subparagraph (A)--
       (i) in clause (i)--

       (I) in subclause (II), by striking ``and'' after the 
     semicolon;
       (II) in subclause (III), by inserting ``and'' after the 
     semicolon; and
       (III) by adding at the end the following:
       ``(IV) for purposes of addressing needs in a transition 
     services expansion year, students with disabilities, 
     including their need for transition services;'';

       (ii) by redesignating clauses (ii) and (iii) as clauses 
     (iii) and (iv), respectively; and
       (iii) by inserting after clause (i) the following:
       ``(ii) include an assessment of the needs of individuals 
     with disabilities for transition services provided under this 
     Act, and coordinated with transition services provided under 
     the Individuals with Disabilities Education Act (20 U.S.C. 
     1400 et seq.), and an assessment as to whether the transition 
     services provided under those Acts meet the needs of 
     individuals with disabilities;''; and
       (B) in subparagraph (D)--
       (i) by redesignating clauses (iii), (iv), and (v) as 
     clauses (iv), (v), and (vi), respectively; and
       (ii) by inserting after clause (ii) the following:
       ``(iii) for use in a transition services expansion year, 
     the methods to be used to improve and expand vocational 
     rehabilitation services for students with disabilities, 
     including the coordination of services designed to facilitate 
     the transition of such students from the receipt of 
     educational services in school to postsecondary life, 
     including the receipt of vocational rehabilitation services 
     under this title, postsecondary education, or employment;'';
       (7) in paragraph (20)--
       (A) by redesignating subparagraph (B) as subparagraph (C);
       (B) by inserting after subparagraph (A) the following:
       ``(B) Information on assistance for beneficiaries of 
     assistance under title ii or xvi of the social security 
     act.--The State plan shall include an assurance that the 
     designated State agency will make available to

[[Page 9586]]

     individuals entitled to benefits under title II or XVI of the 
     Social Security Act (42 U.S.C. 401 et seq., 1381 et seq.) on 
     the basis of a disability or blindness--
       ``(i) information on the availability of benefits and 
     medical assistance authorized under the State medicaid 
     program under title XIX of the Social Security Act (42 U.S.C. 
     1396 et seq.) or under the medicare program under title XVIII 
     of the Social Security Act (42 U.S.C. 1395 et seq.), and 
     medical assistance authorized under other federally funded 
     programs;
       ``(ii) information on the availability of assistance 
     through benefits planning and assistance programs authorized 
     under section 1149 of the Social Security Act (42 U.S.C. 
     1320b-20) and services provided by the State protection and 
     advocacy system and authorized under section 1150 of the 
     Social Security Act (42 U.S.C. 1320b-21); and
       ``(iii) in the case of individuals who are also eligible 
     for a ticket under the Ticket to Work and Self-Sufficiency 
     Program established under section 1148 of the Social Security 
     Act (42 U.S.C. 1320b-19), general information regarding the 
     options for using the ticket and information on how to 
     contact a program manager of the Ticket to Work and Self-
     Sufficiency Program to obtain information on approved 
     employment networks, on providers for the benefits planning 
     and assistance programs described in subparagraph (B) in the 
     State, and on the services provided by the State protection 
     and advocacy system and described in subparagraph (B).''; and
       (C) in subparagraph (C)(ii), as redesignated by 
     subparagraph (A)--
       (i) in subclause (II), by inserting ``, to the maximum 
     extent possible,'' after ``point of contact''; and
       (ii) in subclause (III), by striking ``or regain'' and 
     inserting ``regain, or advance in''; and
       (8) by adding at the end the following:
       ``(25) Services for students with disabilities.--The State 
     plan for a transition services expansion year shall provide 
     an assurance satisfactory to the Secretary that the State--
       ``(A) has developed and shall implement, in each transition 
     services expansion year, strategies to address the needs 
     identified in the assessment described in paragraph (15), and 
     achieve the goals and priorities identified by the State, to 
     improve and expand vocational rehabilitation services for 
     students with disabilities on a statewide basis in accordance 
     with paragraph (15); and
       ``(B) in each transition services expansion year--
       ``(i) shall not use more than 5 percent of the funds 
     reserved under section 110A and available for this 
     subparagraph, to pay for administrative costs; and
       ``(ii) shall use the remaining funds to carry out programs 
     or activities designed to improve and expand vocational 
     rehabilitation services for students with disabilities, 
     through partnerships described in subparagraph (C), that--

       ``(I) facilitate the transition of the students with 
     disabilities from the receipt of educational services in 
     school, to the receipt of vocational rehabilitation services 
     under this title, including, at a minimum, those services 
     specified in the interagency agreement required in paragraph 
     (11)(D);
       ``(II) improve the achievement of post-school goals of 
     students with disabilities through the provision of 
     transition services, including improving the achievement 
     through participation (as appropriate when vocational goals 
     are discussed) in meetings regarding individualized education 
     programs developed under section 614 of the Individuals with 
     Disabilities Education Act (20 U.S.C. 1414);
       ``(III) provide vocational guidance, career exploration 
     services, and job search skills and strategies and technical 
     assistance to students with disabilities;
       ``(IV) support the provision of training and technical 
     assistance to local educational agency personnel responsible 
     for the planning and provision of services to students with 
     disabilities; and
       ``(V) support outreach activities to students with 
     disabilities who are eligible for, and need, services under 
     this title; and

       ``(C) in each transition services expansion year, shall 
     ensure that the funds described in subparagraph (B)(ii) are 
     awarded only to partnerships that--
       ``(i) shall include local vocational rehabilitation 
     services providers and local educational agencies; and
       ``(ii) may include (or may have linkages with) other 
     agencies such as employment, social service, and health 
     organizations, that contribute funds for the provision of 
     vocational rehabilitation services described in subparagraph 
     (B)(ii) for eligible students with disabilities.''.
       (b) Construction.--Section 101 of the Rehabilitation Act of 
     1973 (29 U.S.C. 721) is amended by adding at the end the 
     following:
       ``(c) Construction.--
       ``(1) Definitions.--In this subsection, the terms `child 
     with a disability', `free appropriate public education', 
     `related services', and `special education' have the meanings 
     given the terms in section 602 of the Individuals with 
     Disabilities Education Act (20 U.S.C. 1401).
       ``(2) Obligation to provide or pay for transition 
     services.--Nothing in this part shall be construed to reduce 
     the obligation of a local educational agency or any other 
     agency to provide or pay for any transition services that are 
     also considered special education or related services and 
     that are necessary for ensuring a free appropriate public 
     education to children with disabilities within the State 
     involved.''.

     SEC. 413. ELIGIBILITY AND INDIVIDUALIZED PLAN FOR EMPLOYMENT.

       Section 102 of the Rehabilitation Act of 1973 (29 U.S.C. 
     722) is amended--
       (1) in subsection (b)--
       (A) in paragraph (1)--
       (i) in subparagraph (A), by striking the semicolon at the 
     end and inserting ``, including a listing of all the 
     community resources (including resources from consumer 
     organizations), to the maximum extent possible, to assist in 
     the development of such individual's individualized plan for 
     employment to enable the individual to make informed and 
     effective choices in developing the individualized plan for 
     employment;''; and
       (ii) in subparagraph (D)--

       (I) in clause (i), by striking ``and'' after the semicolon;
       (II) in clause (ii), by striking the period at the end and 
     inserting a semicolon; and
       (III) by adding at the end the following:

       ``(iii) for individuals entitled to benefits under title II 
     or XVI of the Social Security Act (42 U.S.C. 401 et seq., 
     1381 et seq.) on the basis of a disability or blindness--

       ``(I) information on the availability of benefits and 
     medical assistance authorized under the State medicaid 
     program under title XIX of the Social Security Act (42 U.S.C. 
     1396 et seq.) or under the medicare program under title XVIII 
     of the Social Security Act (42 U.S.C. 1395 et seq.), and 
     medical assistance authorized under other federally funded 
     programs;
       ``(II) information on the availability of assistance 
     through benefits planning and assistance programs authorized 
     under section 1149 of the Social Security Act (42 U.S.C. 
     1320b-20) and services provided by the State protection and 
     advocacy system and authorized under section 1150 of the 
     Social Security Act (42 U.S.C. 1320b-21); and
       ``(III) in the case of individuals who are also eligible 
     for a ticket under the Ticket to Work and Self-Sufficiency 
     Program established under section 1148 of the Social Security 
     Act (42 U.S.C. 1320b-19), general information regarding the 
     options for using the ticket and information on how to 
     contact a program manager of the Ticket to Work and Self-
     Sufficiency Program to obtain information on approved 
     employment networks, on providers for the benefits planning 
     and assistance programs described in subparagraph (B) in the 
     State, and on the services provided by the State protection 
     and advocacy system and described in subparagraph (B).'';

       (B) in paragraph (2)(E)--
       (i) in clause (i)(II), by striking ``and'' after the 
     semicolon;
       (ii) in clause (ii), by striking the period at the end and 
     inserting ``; and''; and
       (iii) by adding at the end the following:
       ``(iii) amended, as necessary, to include the post-
     employment services and service providers that are necessary 
     for the individual to maintain, regain, or advance in 
     employment, consistent with the individual's strengths, 
     resources, priorities, concerns, abilities, capabilities, 
     interests, and informed choice.''; and
       (C) in paragraph (3)--
       (i) in subparagraph (B)(i)(I), by striking ``and personal 
     assistance services'' and all that follows and inserting 
     ``mentoring services, and personal assistance services, 
     including training in the management of such services, and 
     referrals described in section 103(a)(3) to the device 
     reutilization programs and device demonstrations described in 
     subparagraphs (B) and (D) of section 4(e)(2) of the Assistive 
     Technology Act of 1998 (42 U.S.C. 3003(e)(2)) through 
     agreements developed under section 101(a)(11)(G); and'';
       (ii) in subparagraph (F)(ii), by striking ``and'' after the 
     semicolon;
       (iii) in subparagraph (G), by striking the period at the 
     end and inserting ``; and''; and
       (iv) by adding at the end the following:
       ``(H) for an individual who is receiving assistance from an 
     employment network under the Ticket to Work and Self-
     Sufficiency Program established under section 1148 of the 
     Social Security Act (42 U.S.C. 1320b-19), a list of the 
     services that are listed in the individual work plan that the 
     individual developed with the employment network under 
     subsection (g) of that section.''; and
       (2) in subsection (c)(7), by inserting ``that take into 
     consideration the informed choice of the individual,'' after 
     ``plan development''.

     SEC. 414. VOCATIONAL REHABILITATION SERVICES.

       Section 103 of the Rehabilitation Act of 1973 (29 U.S.C. 
     723) is amended--
       (1) in subsection (a)--
       (A) in paragraph (5), by inserting ``literacy services,'' 
     after ``vocational adjustment services,'';
       (B) by striking paragraph (15) and inserting the following:
       ``(15) transition services for students with disabilities, 
     that facilitate the transition from school to postsecondary 
     life (including employment through the achievement of the

[[Page 9587]]

     employment outcome identified in the individualized plan for 
     employment), including, in a transition services expansion 
     year, services described in clauses (i) through (iii) of 
     section 101(a)(25)(B);'';
       (C) in paragraph (17), by striking ``and'' after the 
     semicolon;
       (D) in paragraph (18), by striking the period at the end 
     and inserting ``; and''; and
       (E) by adding at the end the following:
       ``(19) mentoring services.''; and
       (2) in subsection (b), by striking paragraph (6) and 
     inserting the following:
       ``(6)(A)(i) Consultation and technical assistance services 
     to assist State and local educational agencies in planning 
     for the transition of students with disabilities from school 
     to postsecondary life, including employment.
       ``(ii) In a transition services expansion year, training 
     and technical assistance described in section 
     101(a)(25)(B)(iv).
       ``(B) In a transition services expansion year, services for 
     groups of individuals with disabilities who meet the 
     requirements of clauses (i) and (iii) of section 7(35)(A), 
     including services described in clauses (i), (ii), (iii), and 
     (v) of section 101(a)(25)(B), to assist in the transition 
     from school to postsecondary life, including employment.''.

     SEC. 415. STATE REHABILITATION COUNCIL.

       Section 105 of the Rehabilitation Act of 1973 (29 U.S.C. 
     725) is amended--
       (1) in subsection (b)--
       (A) in paragraph (1)(A)--
       (i) by striking clause (ix) and inserting the following:
       ``(ix) in a State in which one or more projects provide 
     services under section 121, at least one representative of 
     the directors of the projects;'';
       (ii) in clause (x), by striking the ``and'' after the 
     semicolon;
       (iii) in clause (xi), by striking the period at the end and 
     inserting ``; and''; and
       (iv) by adding at the end the following:
       ``(xii) the director of the State's comprehensive statewide 
     program of technology-related assistance funded under section 
     4 of the Assistive Technology Act of 1998 (29 U.S.C. 
     3003).''; and
       (B) by striking paragraph (5) and inserting the following:
       ``(5) Chairperson.--The Council shall select a chairperson 
     from among the voting membership of the Council.''; and
       (2) in subsection (c)(6), by inserting before the semicolon 
     the following: ``and with the activities of entities carrying 
     out programs under the Assistive Technology Act of 1998 (29 
     U.S.C. 3001 et seq.)''.

     SEC. 416. EVALUATION STANDARDS AND PERFORMANCE INDICATORS.

       Section 106 of the Rehabilitation Act of 1973 (29 U.S.C. 
     726) is amended--
       (1) in subsection (a), by striking paragraph (1)(C) and all 
     that follows through paragraph (2) and inserting the 
     following:
       ``(2) Measures.--The standards and indicators shall include 
     outcome and related measures of program performance that 
     include measures of the program's performance with respect to 
     the transition from school to postsecondary life, including 
     employment, and achievement of the postsecondary vocational 
     goals, of students with disabilities served under the 
     program.''; and
       (2) in subsection (b)(2)(B)(i), by striking ``, if 
     necessary'' and all that follows through the semicolon and 
     inserting ``, if the State has not improved its performance 
     to acceptable levels, as determined by the Commissioner, 
     direct the State to make further revisions to the plan to 
     improve performance, which may include revising the plan to 
     allocate a higher proportion of the State's resources for 
     services to individuals with disabilities if the State 
     agency's spending on such services is low in comparison to 
     spending on such services by comparable agencies in other 
     States;''.

     SEC. 417. MONITORING AND REVIEW.

       Section 107(b)(1) of the Rehabilitation Act of 1973 (29 
     U.S.C. 727(b)(1)) is amended by inserting before the 
     semicolon the following: ``, including--
       ``(A) consulting with the Department of Labor, the Small 
     Business Administration, other appropriate Federal agencies, 
     and businesses or business-led intermediaries; and
       ``(B) based on information obtained through the 
     consultations, providing technical assistance that improves 
     that quality by enabling designated State units to develop 
     successful partnerships with local and multi-State businesses 
     in an effort to employ individuals with disabilities, and 
     technical assistance on developing self-employment 
     opportunities and improving outcomes for individuals with 
     disabilities''.

     SEC. 418. STATE ALLOTMENTS.

       Section 110 of the Rehabilitation Act of 1973 (29 U.S.C. 
     730) is amended--
       (1) by striking subsection (b) and inserting the following:
       ``(b)(1) Not later than 45 days prior to the end of the 
     fiscal year, the Commissioner shall determine, after 
     reasonable opportunity for the submission to the Commissioner 
     of comments by the State agency administering or supervising 
     the program established under this title, that any amount 
     from the payment of an allotment to a State under section 
     111(a) for any fiscal year will not be utilized by such State 
     in carrying out the purposes of this title.
       ``(2)(A) As soon as practicable but not later than the end 
     of the fiscal year, the Commissioner shall reallot the amount 
     available under paragraph (1) to other States, consistent 
     with subparagraphs (B) and (C), for carrying out the purposes 
     of this title to the extent the Commissioner determines such 
     other State will be able to use such additional amount during 
     that fiscal year or the subsequent fiscal year for carrying 
     out such purposes.
       ``(B)(i) The Commissioner shall reallot a portion of the 
     amount available under paragraph (1) for a fiscal year to 
     each State whose allotment under subsection (a) for such 
     fiscal year is less than such State's allotment under 
     subsection (a) for the immediately preceding fiscal year 
     adjusted by the percentage change in the funds available for 
     subsection (a) from the immediately preceding fiscal year.
       ``(ii)(I) A State that is eligible to receive a reallotment 
     under clause (i) shall receive a portion for a fiscal year 
     from the amount available for reallotment under paragraph (1) 
     that is equal to the difference between--
       ``(aa) the amount such State was allotted under subsection 
     (a) for such fiscal year; and
       ``(bb) the amount such State was allotted under subsection 
     (a) for the immediately preceding fiscal year adjusted by the 
     percentage change in the funds available for subsection (a) 
     from the immediately preceding fiscal year.
       ``(II) If the amount available for reallotment under 
     paragraph (1) is insufficient to provide each State eligible 
     to receive a reallotment with the portion described in 
     subclause (I), the amount reallotted to each eligible State 
     shall be determined by the Commissioner.
       ``(C) If there are funds remaining after each State 
     eligible to receive a reallotment under subparagraph (B)(i) 
     receives the portion described in subparagraph (B)(ii), the 
     Commissioner shall reallot the remaining funds among the 
     States requesting a reallotment.
       ``(3) The Commissioner shall reallot an amount to a State 
     under this subsection only if the State will be able to make 
     sufficient payments from non-Federal sources to pay for the 
     non-Federal share of the cost of vocational rehabilitation 
     services under the State plan for the fiscal year for which 
     the amount was appropriated.
       ``(4) For the purposes of this part, any amount made 
     available to a State for any fiscal year pursuant to this 
     subsection shall be regarded as an increase of such State's 
     allotment (as determined under the preceding provisions of 
     this section) for such year.''; and
       (2) by striking subsection (c)(2) and inserting the 
     following:
       ``(2)(A) In this paragraph:
       ``(i) The term `appropriated amount' means the amount 
     appropriated under section 100(b)(1) for allotment under this 
     section.
       ``(ii) The term `covered year' means a fiscal year--
       ``(I) that begins after September 30, 2004; and
       ``(II) for which the appropriated amount exceeds the total 
     of--
       ``(aa) the appropriated amount for the preceding fiscal 
     year; and
       ``(bb) 0.075 percent of the appropriated amount for the 
     preceding fiscal year.
       ``(B) For each covered year, the sum referred to in 
     paragraph (1) shall be, as determined by the Secretary--
       ``(i) not less than the total of the sum reserved under 
     this subsection for the preceding fiscal year and 0.1 percent 
     of the appropriated amount for the covered year, subject to 
     clause (ii); and
       ``(ii) not more than 1.5 percent of the appropriated amount 
     for the covered year.
       ``(C) For each fiscal year that is not a covered year, the 
     sum referred to in paragraph (1) shall be, as determined by 
     the Secretary--
       ``(i) not less than the sum reserved under this subsection 
     for the preceding fiscal year, subject to clause (ii); and
       ``(ii) not more than 1.5 percent of the appropriated amount 
     for the covered year.''.

     SEC. 419. RESERVATION FOR EXPANDED TRANSITION SERVICES.

       The Rehabilitation Act of 1973 is amended by inserting 
     after section 110 (29 U.S.C. 730) the following:

     ``SEC. 110A. RESERVATION FOR EXPANDED TRANSITION SERVICES.

       ``(a) Reservation.--From the State allotment under section 
     110 in a transition services expansion year, each State shall 
     reserve an amount calculated by the Commissioner under 
     subsection (b) to carry out programs and activities under 
     sections 101(a)(25)(B) and 103(b)(6).
       ``(b) Calculation.--The Commissioner shall calculate the 
     amount to be reserved for such programs and activities for a 
     fiscal year by each State by multiplying $50,000,000 by the 
     percentage determined by dividing--
       ``(1) the amount allotted to that State under section 110 
     for the prior fiscal year; by
       ``(2) the total amount allotted to all States under section 
     110 for that prior fiscal year.''.

     SEC. 420. CLIENT ASSISTANCE PROGRAM.

       Section 112 of the Rehabilitation Act of 1973 (29 U.S.C. 
     732) is amended--
       (1) in subsection (a)--
       (A) in the first sentence, by striking ``States'' and 
     inserting ``agencies designated under subsection (c)''; and

[[Page 9588]]

       (B) in the second sentence, by striking ``State'' and 
     inserting ``State in which the program is located'';
       (2) in subsection (b), by striking ``the State has in 
     effect not later than October 1, 1984, a client assistance 
     program which'' and inserting ``the State designated under 
     subsection (c) an agency that'';
       (3) in subsection (e)--
       (A) in paragraph (1)--
       (i) in subparagraph (A), by striking ``The Secretary'' and 
     all that follows through the period and inserting the 
     following: ``After reserving funds under subparagraphs (E) 
     and (F), the Secretary shall allot the remainder of the sums 
     appropriated for each fiscal year under this section among 
     the agencies designated under subsection (c) within the 
     States (referred to individually in this subsection as a 
     `designated agency') on the basis of relative population of 
     each State, except that no such agency shall receive less 
     than $50,000.'';
       (ii) in subparagraph (B), by inserting ``the designated 
     agencies located in'' after ``each to'';
       (iii) in subparagraph (D)(i)--

       (I) by inserting ``the designated agencies located in'' 
     after ``$100,000 for''; and
       (II) by inserting ``the designated agencies located in'' 
     after ``$45,000 for''; and

       (iv) by adding at the end the following:
       ``(E)(i) For any fiscal year for which the amount 
     appropriated to carry out this section equals or exceeds 
     $13,000,000, the Secretary shall reserve funds appropriated 
     under this section to make a grant to the protection and 
     advocacy system serving the American Indian Consortium to 
     provide client assistance services in accordance with this 
     section. The amount of such a grant shall be the same amount 
     as is provided to a territory under subparagraph (B), as 
     increased under clauses (i) and (ii) of subparagraph (D).
       ``(ii) In this subparagraph:
       ``(I) The term `American Indian Consortium' has the meaning 
     given the term in section 102 of the Developmental 
     Disabilities Assistance and Bill of Rights Act of 2000 (42 
     U.S.C. 15002).
       ``(II) The term `protection and advocacy system' means a 
     protection and advocacy system established under subtitle C 
     of title I of the Developmental Disabilities Assistance and 
     Bill of Rights Act of 2000 (42 U.S.C. 15041 et seq.).
       ``(F) For any fiscal year for which the amount appropriated 
     to carry out this section equals or exceeds $14,000,000, the 
     Secretary shall reserve not less than 1.8 percent and not 
     more than 2.2 percent of such amount to provide a grant for 
     training and technical assistance for the programs 
     established under this section. Such training and technical 
     assistance shall be coordinated with activities provided 
     under section 509(c)(1)(A).''; and
       (B) in paragraph (2)--
       (i) by striking ``State'' each place such term appears and 
     inserting ``designated agency''; and
       (ii) by striking ``States'' each place such term appears 
     and inserting ``designated agencies'';
       (4) in subsection (f), by striking ``State'' and inserting 
     ``agency designated under subsection (c)'';
       (5) in subsection (g)(1), by striking ``State'' and 
     inserting ``State in which the program is located''; and
       (6) in subsection (h), by striking ``fiscal years 1999 
     through 2003'' and inserting ``fiscal years 2006 through 
     2011''.

     SEC. 421. INCENTIVE GRANTS.

       Part B of title I of the Rehabilitation Act of 1973 (29 
     U.S.C. 730 et seq.) is amended by adding at the end the 
     following:

     ``SEC. 113. INCENTIVE GRANTS.

       ``(a) Authority.--The Commissioner is authorized to make 
     incentive grants to States that, based on the criteria 
     established under subsection (b)(1), demonstrate--
       ``(1) a high level of performance; or
       ``(2) a significantly improved level of performance in a 
     reporting period as compared to the previous reporting period 
     or periods.
       ``(b) Criteria.--
       ``(1) Establishment.--Not later than 180 days after the 
     date of enactment of this section, the Commissioner shall 
     establish, and publish in the Federal Register, criteria for 
     making grant awards under subsection (a).
       ``(2) Development and evaluation standards.--The criteria 
     established under paragraph (1) shall--
       ``(A) be developed with input from designated State 
     agencies and other vocational rehabilitation stakeholders, 
     including vocational rehabilitation consumers and consumer 
     organizations; and
       ``(B) be based upon the evaluation standards and 
     performance indicators established under section 106 and 
     other performance-related measures that the Commissioner 
     determines to be appropriate.
       ``(c) Use of Funds.--A State that receives a grant under 
     subsection (a) shall use the grant funds for any approved 
     activities in the State's State plan submitted under section 
     101.
       ``(d) No Non-Federal Share Requirement.--The provisions of 
     sections 101(a)(3) and 111(a)(2) shall not apply to this 
     section.
       ``(e) Authorization of Appropriations.--There are 
     authorized to be appropriated to carry out this section such 
     sums as may be necessary for each of fiscal years 2006 
     through 2011.''.

     SEC. 422. VOCATIONAL REHABILITATION SERVICES GRANTS.

       Section 121 of the Rehabilitation Act of 1973 (29 U.S.C. 
     741) is amended--
       (1) in subsection (a), in the first sentence, by inserting 
     ``, consistent with such individuals' strengths, resources, 
     priorities, concerns, abilities, capabilities, interests, and 
     informed choice, so that such individuals may prepare for, 
     and engage in, gainful employment'' before the period at the 
     end; and
       (2) in subsection (b)--
       (A) in paragraph (1)--
       (i) in subparagraph (B), by striking ``and'' after the 
     semicolon;
       (ii) in subparagraph (C), by striking the period at the end 
     and inserting ``; and''; and
       (iii) by adding at the end the following:
       ``(D) contains assurances that--
       ``(i) all decisions affecting eligibility for vocational 
     rehabilitation services, the nature and scope of available 
     services, and the provision of such services, will be made by 
     a representative of the tribal vocational rehabilitation 
     program; and
       ``(ii) such decisions will not be delegated to another 
     agency or individual.'';
       (B) in paragraph (3), by striking the first sentence and 
     inserting the following: ``An application approved under this 
     part that complies with the program requirements set forth in 
     the regulations promulgated to carry out this part shall be 
     effective for 5 years and shall be renewed for additional 5-
     year periods if the Commissioner determines that the grant 
     recipient demonstrated acceptable past performance and the 
     grant recipient submits a plan, including a proposed budget, 
     to the Commissioner that the Commissioner approves that 
     identifies future performance criteria, goals, and 
     objectives.''; and
       (C) by striking paragraph (4) and inserting the following:
       ``(4) In allocating funds under this part, the Secretary 
     shall give priority to paying the continuation costs of 
     projects in existence on the date of the allocation and may 
     provide for increases in funding for such projects that the 
     Secretary determines to be necessary.''.

     SEC. 423. GAO STUDIES.

       (a) Study on Title I and Ticket to Work.--
       (1) In general.--The Comptroller General of the United 
     States shall conduct a study on the interaction of programs 
     carried out under title I of the Rehabilitation Act of 1973 
     (29 U.S.C. 720 et seq.) with the Ticket to Work and Self-
     Sufficiency Program established under section 1148 of the 
     Social Security Act (42 U.S.C. 1320b-19), including the 
     impact of the interaction on beneficiaries, community 
     rehabilitation programs (as defined in section 7 of the 
     Rehabilitation Act of 1973 (29 U.S.C. 705)), and State 
     vocational rehabilitation agencies.
       (2) Conduct of study.--In conducting the study under 
     paragraph (1), the Comptroller General of the United States 
     shall consult with all types of participants in the Ticket to 
     Work and Self-Sufficiency Program, including the Social 
     Security Administration, the Rehabilitation Services 
     Administration, ticketholders, designated State agencies, 
     entities carrying out such community rehabilitation programs 
     (including employment networks and nonemployment networks), 
     protection and advocacy agencies, MAXIMUS, and organizations 
     representing the interests of ticketholders.
       (3) Report to congress.--Not later than 18 months after the 
     date of enactment of this Act, the Comptroller General of the 
     United States shall submit the study conducted pursuant to 
     this subsection to the appropriate committees of Congress.
       (b) Study on the Allotment Formula.--
       (1) In general.--The Comptroller General of the United 
     States shall conduct a study on the relationship between the 
     State allotment formula under section 110 of the 
     Rehabilitation Act of 1973 (29 U.S.C. 730) and the ability of 
     States to provide vocational rehabilitation services in 
     accordance with the States' State plans under section 101 of 
     such Act (29 U.S.C. 721).
       (2) Conduct of study.--In conducting the study under 
     paragraph (1), the Comptroller General of the United States 
     shall consult with appropriate entities.
       (3) Report to congress.--Not later than 12 months after the 
     date of enactment of this Act, the Comptroller General of the 
     United States shall submit the study conducted pursuant to 
     this subsection to the appropriate committees of Congress.

                   Subtitle B--Research and Training

     SEC. 431. DECLARATION OF PURPOSE.

       Section 200(3) of the Rehabilitation Act of 1973 (29 U.S.C. 
     760(3)) is amended by inserting ``, in a timely and efficient 
     manner,'' before ``through''.

     SEC. 432. AUTHORIZATION OF APPROPRIATIONS.

       Section 201(a) of the Rehabilitation Act of 1973 (29 U.S.C. 
     761(a)) is amended--
       (1) in paragraph (1), by striking ``fiscal years 1999 
     through 2003'' and inserting ``fiscal years 2006 through 
     2011''; and
       (2) in paragraph (2), by striking ``fiscal years 1999 
     through 2003'' and inserting ``fiscal years 2006 through 
     2011''.

[[Page 9589]]



     SEC. 433. NATIONAL INSTITUTE ON DISABILITY AND REHABILITATION 
                   RESEARCH.

       Section 202 of the Rehabilitation Act of 1973 (29 U.S.C. 
     762) is amended--
       (1) in subsection (b)--
       (A) in paragraph (6), by inserting before the semicolon the 
     following: ``, including convening a national assistive 
     technology summit, to be held at or in conjunction with a 
     national conference relating to assistive technology with 
     respect to all categories of disabilities''; and
       (B) in paragraph (10), by striking ``and telecommuting'' 
     and inserting ``, supported employment, and telecommuting'';
       (2) in subsection (f)(1)--
       (A) by striking ``Federal employees'' and inserting 
     ``Department of Education employees''; and
       (B) by adding at the end the following: ``The peer review 
     panel shall include a director of a designated State unit. It 
     shall include a member of the covered school community (for 
     an activity resulting in educational materials or a product 
     to be used in a covered school), a member of the business 
     community (for an activity resulting in a product to be used 
     in an employment activity), assistive technology developers 
     and manufacturers (for an activity relating to assistive 
     technology), or information technology vendors and 
     manufacturers (for an activity relating to information 
     technology).'';
       (3) by redesignating subsections (i), (j), and (k) as 
     subsections (j), (k), and (l), respectively;
       (4) by inserting after subsection (h) the following:
       ``(i)(1) The Director, with the assistance of the 
     Rehabilitation Research Advisory Council established under 
     section 205, shall determine if entities that receive 
     financial assistance under this title are complying with the 
     applicable requirements of this Act and achieving measurable 
     goals, described in section 204(d)(2), that are consistent 
     with the requirements of the programs under which the 
     entities received the financial assistance.
       ``(2) To assist the Director in carrying out the 
     responsibilities described in paragraph (1), the Director 
     shall require recipients of financial assistance under this 
     title to submit relevant information to evaluate program 
     outcomes with respect to the measurable goals described in 
     section 204(d)(2).''; and
       (5) by adding at the end the following:
       ``(m)(1) Not later than December 31 of each year, the 
     Secretary shall prepare, and submit to the Secretary, 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 on the activities 
     funded under this title.
       ``(2) Such report shall include--
       ``(A) a compilation and summary of the information provided 
     by recipients of financial assistance for such activities 
     under this title; and
       ``(B) a summary of the applications for financial 
     assistance received under this title and the progress of the 
     recipients of financial assistance in achieving the 
     measurable goals described in section 204(d)(2).
       ``(n)(1) If the Director determines that an entity that 
     receives financial assistance under this title fails to 
     comply with the applicable requirements of this Act, or to 
     make progress toward achieving the measurable goals described 
     in section 204(d)(2), with respect to the covered activities 
     involved, the Director shall assist the entity through 
     technical assistance or other means, within 90 days after 
     such determination, to develop a corrective action plan.
       ``(2) If the entity fails to develop and comply with a 
     corrective action plan described in paragraph (1) during a 
     fiscal year, the entity shall be subject to 1 of the 
     following corrective actions selected by the Director:
       ``(A) Partial or complete termination of financial 
     assistance for the covered activities, until the entity 
     develops and complies with such a plan.
       ``(B) Ineligibility to receive financial assistance for 
     such covered activities for the following year.
       ``(3) The Secretary shall establish appeals procedures for 
     entities described in paragraph (1) that the Secretary 
     determines fail to comply with the applicable requirements of 
     this Act, or to make progress toward achieving the measurable 
     goals.
       ``(4) As part of the annual report required under 
     subsection (m), the Secretary shall describe each action 
     taken by the Secretary under paragraph (1) or (2) and the 
     outcomes of such action.''.

     SEC. 434. INTERAGENCY COMMITTEE.

       Section 203 of the Rehabilitation Act of 1973 (29 U.S.C. 
     763) is amended--
       (1) in subsection (a)(1), by striking ``and the Director of 
     the National Science Foundation'' and inserting ``the 
     Director of the National Science Foundation, the Secretary of 
     Commerce, and the Administrator of the Small Business 
     Administration''; and
       (2) in subsection (b)(2)--
       (A) in subparagraph (D), by striking ``and'' after the 
     semicolon;
       (B) in subparagraph (E), by striking the period at the end 
     and inserting ``; and''; and
       (C) by adding at the end the following:
       ``(F) conduct a study, on the assistive technology 
     industry, for which the Committee shall--
       ``(i) determine the number of individuals who use assistive 
     technology and the scope of the technologies they use;
       ``(ii) separately identify categories of assistive 
     technology companies by the disability group served, and the 
     type of product or service provided, categorized by--
       ``(I) size (small, medium, and large) of the companies;
       ``(II) capitalization of the companies;
       ``(III) region in which the companies are located; and
       ``(IV) products or services produced by the companies;
       ``(iii) compile aggregate data on revenues and unit sales 
     of such companies, including information on international 
     sales, for a recent reporting period, categorized by 
     institution or user type acquiring the products or services, 
     disability for which the products or services are used, and 
     industry segment for the companies;
       ``(iv) identify platform availability and usage, for those 
     products and services that are electronic and information 
     technology-related;
       ``(v) identify the types of clients of the companies, such 
     as government, school, business, private payor, and 
     charitable clients, and funding sources for the clients; and
       ``(vi) specify geographic segments for the companies, to 
     determine whether there are significant distinctions in 
     industry opportunities on the basis of geography, other than 
     distinctions related to population.''.

     SEC. 435. RESEARCH AND OTHER COVERED ACTIVITIES.

       Section 204 of the Rehabilitation Act of 1973 (29 U.S.C. 
     764) is amended--
       (1) in subsection (a)--
       (A) in paragraph (2)(B)--
       (i) in clause (vi), by striking ``and'' after the 
     semicolon;
       (ii) in clause (vii), by striking the period at the end and 
     inserting ``; and''; and
       (iii) by adding at the end the following:
       ``(viii) studies, analyses, and other activities affecting 
     employment outcomes, including self-employment and 
     telecommuting, of individuals with disabilities.''; and
       (B) by adding at the end the following:
       ``(3) In carrying out this section, the Director shall 
     emphasize covered activities that are collaborations 
     between--
       ``(A) for-profit companies working in the assistive 
     technology, rehabilitative engineering, or information 
     technology fields; and
       ``(B) States or public or private agencies and 
     organizations.
       ``(4) In carrying out this section, the Director shall 
     emphasize covered activities that include plans for--
       ``(A) dissemination of educational materials, research 
     results, or findings, conclusions, and recommendations 
     resulting from covered activities; or
       ``(B) the commercialization of marketable products 
     resulting from the covered activities.'';
       (2) in subsection (b)--
       (A) in paragraph (1), by striking ``(18)'' each place it 
     appears and inserting ``(19)'';
       (B) in paragraph (2)--
       (i) in subparagraph (A)(i), by striking ``rehabilitation 
     services or'' and inserting ``rehabilitation services, 
     developers or providers of assistive technology devices, 
     assistive technology services, or information technology 
     devices or services, or providers of'' after ``rehabilitation 
     services'';
       (ii) in subparagraph (B)--

       (I) in clause (i), by inserting ``improve the evaluation 
     process for determining the assistive technology needs of 
     individuals with disabilities,'' after ``conditions,'';
       (II) in clause (ii), by inserting ``and assistive 
     technology services'' before the semicolon; and
       (III) in clause (iii), by inserting ``, assistive 
     technology services personnel,'' before ``and other'';

       (iii) in subparagraph (C)--

       (I) in clause (i), by inserting ``, including research on 
     assistive technology devices, assistive technology services, 
     and accessible electronic and information technology 
     devices'' before the semicolon; and
       (II) in clause (iii), by inserting ``, including the use of 
     assistive technology devices and accessible electronic and 
     information technology devices in employment'' before the 
     semicolon;

       (iv) in subparagraph (D), by inserting ``, including 
     training to provide knowledge about assistive technology 
     devices, assistive technology services, and accessible 
     electronic and information technology devices and services,'' 
     after ``personnel''; and
       (v) in subparagraph (G)(i), by inserting ``, assistive 
     technology-related, and accessible electronic and information 
     technology-related'' before ``courses''; and
       (C) in paragraph (3)--
       (i) in subparagraph (D)(ii), by adding at the end the 
     following: ``Each such Center conducting activities including 
     the creation of an assistance technology device shall include 
     in the committee representatives from the assistive 
     technology industry and accessible electronic and information 
     technology industry. Each such Center conducting activities 
     involving a covered school, or an employer, shall include in 
     the committee a representative of the covered school, or of 
     the employer, respectively.''; and

[[Page 9590]]

       (ii) in subparagraph (G)(ii) by inserting ``the success of 
     any commercialized product researched or developed through 
     the Center,'' after ``disabilities,'';
       (D) in paragraph (8), by inserting ``the Department of 
     Commerce, the Small Business Administration,'' before ``other 
     Federal agencies,'';
       (E) in paragraph (13), in the matter preceding clause (i), 
     by striking ``employment needs of individuals with 
     disabilities'' and inserting ``employment needs, 
     opportunities, and outcomes, including self-employment, 
     supported employment, and telecommuting needs, opportunities, 
     and outcomes, of individuals with disabilities, including 
     older individuals with disabilities, and students with 
     disabilities who are transitioning from school to 
     postsecondary life, including employment''; and
       (E) by adding at the end the following:
       ``(19) Research grants may be used to provide for research 
     and demonstration projects that--
       ``(A) explore methods and practices for promoting access to 
     electronic commerce activities for individuals with 
     disabilities; and
       ``(B) will--
       ``(i) ensure dissemination of research findings;
       ``(ii) provide encouragement and support for initiatives 
     and new approaches by companies engaged in electronic 
     commerce activities; and
       ``(iii) result in the establishment and maintenance of 
     close working relationships between the disability, research, 
     and business communities.'';
       (3) in subsection (c)(2), by striking ``$500,000'' and 
     inserting ``$750,000''; and
       (4) by adding at the end the following:
       ``(d)(1) In awarding grants, contracts, or other financial 
     assistance under this title, the Director shall award the 
     financial assistance on a competitive basis.
       ``(2)(A) To be eligible to receive financial assistance 
     described in paragraph (1) for a covered activity, an entity 
     shall submit an application to the Director at such time, in 
     such manner, and containing such information as the Director 
     may require.
       ``(B) The application shall include information 
     describing--
       ``(i) measurable goals, and a timeline and specific plan 
     for meeting the goals, that the applicant has set for 
     addressing priorities related to--
       ``(I) commercialization of a marketable product (including 
     a marketable curriculum or research) resulting from the 
     covered activity;
       ``(II) in the case of a covered activity relating to 
     technology, technology transfer;
       ``(III) in the case of research, dissemination of research 
     results to, as applicable, government entities, individuals 
     with disabilities, covered schools, the business community, 
     the assistive technology community, and the accessible 
     electronic and information technology community; and
       ``(IV) other matters as required by the Director; and
       ``(ii) information describing how the applicant will 
     quantifiably measure the goals to determine whether the goals 
     have been accomplished.
       ``(3)(A) In the case of an application for financial 
     assistance under this title to carry out a covered activity 
     that results in the development of a marketable product, the 
     application shall also include a commercialization and 
     dissemination plan, containing commercialization and 
     marketing strategies for the product involved, and strategies 
     for disseminating information about the product. The 
     financial assistance shall not be used to carry out the 
     commercialization and marketing strategies.
       ``(B) In the case of any other application for financial 
     assistance to carry out a covered activity under this title, 
     the application shall also include a dissemination plan, 
     containing strategies for disseminating educational 
     materials, research results, or findings, conclusions, and 
     recommendations, resulting from the covered activity.''.

     SEC. 436. REHABILITATION RESEARCH ADVISORY COUNCIL.

       Section 205 of the Rehabilitation Act of 1973 (29 U.S.C. 
     765) is amended--
       (1) in subsection (a), by inserting ``at least'' before 
     ``12''; and
       (2) in subsection (c), by inserting after ``rehabilitation 
     researchers,'' the following: ``the directors of community 
     rehabilitation programs, the business community (and shall 
     include a representative of the small business community) 
     that has experience with the system of vocational 
     rehabilitation services carried out under this Act and with 
     hiring individuals with disabilities, the community of 
     assistive technology developers and manufacturers, the 
     community of information technology vendors and 
     manufacturers, the community of entities carrying out 
     programs under the Assistive Technology Act of 1998 (29 
     U.S.C. 3001 et seq.), the community of covered school 
     professionals,''.

     SEC. 437. DEFINITION.

       Title II of the Rehabilitation Act of 1973 (29 U.S.C. 761 
     et seq.) is amended by adding at the end the following:

     ``SEC. 206. DEFINITION.

       ``In this title, the term `covered school' means an 
     elementary school or secondary school (as such terms are 
     defined in section 9101 of the Elementary and Secondary 
     Education Act of 1965 (20 U.S.C. 7801)), a community college, 
     or an institution of higher education.''.

     Subtitle C--Professional Development and Special Projects and 
                             Demonstrations

     SEC. 441. TRAINING.

       Section 302 of the Rehabilitation Act of 1973 (29 U.S.C. 
     772) is amended--
       (1) in subsection (a)(1)--
       (A) in subparagraph (F), by striking the ``and'' after the 
     semicolon;
       (B) in subparagraph (G), by striking the period at the end 
     and inserting ``; and''; and
       (C) by adding at the end the following:
       ``(H) personnel trained in providing assistive technology 
     services.'';
       (2) in subsection (b)(1)(B)(i), by striking ``or 
     prosthetics and orthotics'' and inserting ``prosthetics and 
     orthotics, rehabilitation teaching for the blind, or 
     orientation and mobility instruction''; and
       (3) in subsection (i), by striking ``fiscal years 1999 
     through 2003'' and inserting ``fiscal years 2006 through 
     2011''.

     SEC. 442. DEMONSTRATION AND TRAINING PROGRAMS.

       Section 303 of the Rehabilitation Act of 1973 (29 U.S.C. 
     773) is amended--
       (1) in subsection (b)(5)(A)(i), by striking ``special 
     projects'' and inserting ``not less than 2 special 
     projects'';
       (2) by redesignating subsections (c), (d), and (e) as 
     subsections (f), (g), and (i), respectively;
       (3) by inserting after subsection (b) the following:
       ``(c) Demonstration Projects for Employment of Students 
     With Intellectual Disabilities or Mental Illness.--
       ``(1) Purpose.--The purpose of this subsection is to 
     support model demonstration projects to provide supported and 
     competitive employment experiences for students with 
     intellectual disabilities or students with mental illness, 
     and training for personnel that work with students described 
     in this paragraph, to enable the students to gain employment 
     skills and experience that will promote effective transitions 
     from school to postsecondary life, including employment.
       ``(2) Awards authorized.--
       ``(A) Competitive awards authorized.--The Secretary may 
     award grants, contracts, and cooperative agreements, on a 
     competitive basis, to eligible organizations described in 
     paragraph (3), to enable the organizations to carry out 
     demonstration projects described in paragraph (1).
       ``(B) Duration.--The Secretary shall award grants, 
     contracts, and cooperative agreements under this subsection 
     for periods of 3 to 5 years.
       ``(3) Eligible organizations.--To be eligible to receive a 
     grant, contract, or cooperative agreement under this 
     subsection, an organization shall--
       ``(A) have expertise in providing employment and support 
     services for individuals with intellectual disabilities or 
     individuals with mental illness;
       ``(B) have a proven track record in successfully running 
     supported employment programs;
       ``(C) provide employment services that are exclusively 
     integrated community-based supported employment services;
       ``(D) have expertise in creating natural supports for 
     employment;
       ``(E) have expertise in providing computer training for the 
     targeted population for the project involved; and
       ``(F) have experience operating mentoring programs for the 
     target population in middle and high schools for at least a 
     decade in diverse communities throughout the Nation.
       ``(4) Applications.--Each organization desiring to receive 
     a grant, contract, or cooperative agreement under this 
     subsection shall submit an application to the Secretary at 
     such time, in such manner, and including such information as 
     the Secretary may require. Each application shall include--
       ``(A) a description of how the organization plans to carry 
     out the activities authorized in this subsection through a 
     demonstration project;
       ``(B) a description of how the organization will evaluate 
     the project;
       ``(C) a description of how the organization will 
     disseminate information about the activities and the impact 
     of the activities on the lives of students served by the 
     project; and
       ``(D) a description of how the organization will coordinate 
     activities with any other relevant service providers in the 
     locality where the organization is based, including federally 
     supported independent living centers.
       ``(5) Authorized activities.--An organization that receives 
     a grant, contract, or cooperative agreement under this 
     subsection shall use the funds made available through the 
     grant, contract, or cooperative agreement to carry out 1 or 
     more of the following activities for individuals, ages 14 
     through 21, who are students with intellectual disabilities 
     or students with mental illness:
       ``(A) Providing supported and competitive employment 
     experiences.--The development of innovative and effective 
     supported and competitive employment experiences after 
     school, on weekends, and in the summer, utilizing natural 
     supports that lead to competitive high-paying jobs.

[[Page 9591]]

       ``(B) Providing training to school and transition 
     personnel.--The development and deployment of experts to work 
     with transition programs (including personnel working with 
     students on transition) so that personnel from the programs 
     develop skills needed to train students with intellectual 
     disabilities or students with mental illness to be successful 
     in competitive employment in a range of settings, including 
     office settings. The training shall include training for the 
     personnel in providing instruction to students in computer 
     skills, office skills, interview etiquette, and appropriate 
     social behavior required for successful long-term employment 
     in professional environments.
       ``(6) Authorization of appropriations.--There are 
     authorized to be appropriated to carry out this subsection 
     $5,000,000 for fiscal year 2006 and such sums as may be 
     necessary for fiscal years 2007 through 2011.
       ``(d) Demonstration Project for Employment of Individuals 
     Who are Deaf and Low Functioning.--
       ``(1) Purpose.--The purpose of this subsection is to 
     support a model demonstration project to provide training and 
     employment and support services for individuals who are deaf 
     and low functioning to enable them to gain employment skills 
     that will allow them to become employed and economically 
     self-sufficient.
       ``(2) Definition.--
       ``(A) In general.--In this subsection, the term `individual 
     who is deaf and low functioning' means an individual who has 
     been deaf from birth or very early childhood, reads at or 
     below the second grade level, has little or no intelligible 
     speech, and lacks a secondary school diploma or its 
     recognized equivalent.
       ``(B) Secondary disabilities.--Such term may include an 
     individual with a secondary disability.
       ``(3) Grants authorized.--
       ``(A) Competitive grants authorized.--The Secretary may 
     award grants to State agencies, other public agencies or 
     organizations, or not-for-profit organizations with expertise 
     in providing training and employment and support services for 
     individuals who are deaf and low functioning to support model 
     demonstration projects.
       ``(B) Duration.--Grants under this subsection shall be 
     awarded for a period not to exceed 5 years.
       ``(4) Authorized activities.--
       ``(A) Developing a comprehensive training program.--Each 
     grant recipient under this subsection shall develop an 
     innovative, comprehensive training program for individuals 
     who are deaf and low functioning that can be implemented at 
     multiple training locations through such means as distance 
     learning and use of advanced technology, as appropriate. Such 
     training program shall be developed to maximize the potential 
     for replication of the program by other training providers.
       ``(B) Implementation.--Each grant recipient under this 
     subsection shall implement the comprehensive training program 
     developed under subparagraph (A) as soon as feasible. Such 
     training shall provide instruction on the job and the social 
     skills necessary for successful long-term employment of 
     individuals who are deaf and low functioning.
       ``(C) Establishing a post-training program of employment 
     and support services.--Each grant recipient under this 
     subsection shall implement employment and support services to 
     assist individuals who complete the training program under 
     subparagraph (A) in securing employment and transitioning to 
     the workplace, for a period of not less than 90 days 
     subsequent to placement in the employment.
       ``(5) Applications.--Each entity desiring to receive a 
     grant under this subsection for a model demonstration project 
     shall submit an application to the Secretary at such time, in 
     such manner, and accompanied by such information as the 
     Secretary may require including--
       ``(A) a description of how the applicant plans to address 
     the activities authorized under this subsection;
       ``(B) a description of the evaluation plan to be used in 
     the model demonstration project;
       ``(C) a description of how the applicant will disseminate 
     information about the training program developed and the 
     results of the project; and
       ``(D) a description of how the entity will coordinate 
     activities with any other relevant service providers or 
     entities providing training and employment and support 
     services for individuals who are deaf and low functioning.
       ``(6) Mandated evaluation and dissemination activities.--
       ``(A) Annual report.--Not later than 2 years after the date 
     on which a grant under this subsection is awarded and 
     annually thereafter, the grant recipient shall submit to the 
     Commissioner a report containing information on--
       ``(i) the number of individuals who are participating in 
     the demonstration project funded under this subsection;
       ``(ii) the employment and other skills being taught in the 
     project;
       ``(iii) the number of individuals participating in the 
     project that are placed in employment;
       ``(iv) the job sites in which those individuals are placed 
     and the type of jobs the individuals are placed in; and
       ``(v) the number of individuals who have dropped out of the 
     project and the reasons for their terminating participation 
     in the project.
       ``(B) Evaluation of the project.--Each grant recipient 
     under this subsection shall implement the evaluation plan 
     approved in its application for determining the results of 
     the project within the timeframe specified in, and following 
     the provisions of, the approved application.
       ``(C) Participant evaluation process; final evaluation.--In 
     the final year of the project, the grant recipient will 
     prepare and submit to the Commissioner a final evaluation 
     report of the results of the model demonstration project 
     containing--
       ``(i) information on--

       ``(I) the number of individuals who participated in the 
     demonstration project;
       ``(II) the number of those individuals that are placed in 
     employment;
       ``(III) the job sites in which those individuals were 
     placed and the type of jobs the individuals were placed in;
       ``(IV) the number of those individuals who have dropped out 
     of the project and the reasons for their terminating 
     participation in the project; and
       ``(V) the number of those individuals who participated in 
     the project and who remain employed as of 2 months prior to 
     the date on which the final report is submitted to the 
     Secretary;

       ``(ii) a written analysis of the project, including both 
     the strengths and weaknesses of the project, to assist other 
     entities in replicating the training program developed 
     through the project; and
       ``(iii) such other information as the Secretary determines 
     appropriate.
       ``(D) Dissemination.--Not later than 5 years after the date 
     on which a grant is awarded under this subsection, the 
     evaluation report containing results of activities funded by 
     such grant shall be disseminated to designated State 
     agencies, school systems providing instruction to students 
     who are individuals who are deaf and low functioning, 
     supported employment providers, postsecondary vocational 
     training programs, employers, the Social Security 
     Administration, and other interested parties.
       ``(7) Authorization of appropriations.--There are 
     authorized to be appropriated to carry out this subsection, 
     $5,000,000 for fiscal year 2006 and such sums as may be 
     necessary for each of fiscal years 2007 through 2011.
       ``(e) Training and Technical Assistance Center To Promote 
     High-Quality Employment Outcomes for Individuals Receiving 
     Services from Designated State Agencies.--
       ``(1) In general.--The Commissioner shall award a grant, 
     contract, or cooperative agreement to an entity to support a 
     training and technical assistance program that--
       ``(A) responds to State-specific information requests 
     concerning high-quality employment outcomes, from designated 
     State agencies funded under title I, including--
       ``(i) requests for information on the expansion of self-
     employment, business ownership, and business development 
     opportunities, and other types of entrepreneural employment 
     opportunities for individuals with disabilities;
       ``(ii) requests for information on the expansion and 
     improvement of transition services to facilitate the 
     transition of students with disabilities from school to 
     postsecondary life, including employment;
       ``(iii) requests for examples of policies, practices, 
     procedures, or regulations, that have enhanced or may enhance 
     access to funding for assistive technology devices and 
     assistive technology services for individuals with 
     disabilities;
       ``(iv) requests for information on effective approaches to 
     enhance informed choice and a consumer-directed State 
     vocational rehabilitation system;
       ``(v) requests for assistance developing corrective action 
     plans;
       ``(vi) requests for assistance in developing and 
     implementing effective data collection and reporting systems 
     that measure the outcomes of the vocational rehabilitation 
     services, and preparing reports for the Commissioner as 
     described in section 106(b)(1); and
       ``(vii) requests for information on effective approaches 
     that enhance employment outcomes for individuals with 
     disabilities, including conducting outreach and forming 
     partnerships with business and industry; and
       ``(B) provides State-specific, regional, and national 
     training and technical assistance concerning vocational 
     rehabilitation services and related information to designated 
     State agencies, including--
       ``(i) facilitating onsite and electronic information 
     sharing using state-of-the-art Internet technologies such as 
     real-time online discussions, multipoint video conferencing, 
     and web-based audio/video broadcasts, on emerging topics that 
     affect vocational rehabilitation programs authorized under 
     title I;
       ``(ii) enabling the designated State agencies to coordinate 
     training and data collection efforts with one-stop centers 
     established under section 121(e) of the Workforce Investment 
     Act of 1998 (29 U.S.C. 2841(e));
       ``(iii) enabling the designated State agencies to provide 
     information on how the vocational rehabilitation programs 
     authorized

[[Page 9592]]

     under title I can provide technical assistance to the one-
     stop centers on making programs offered through the centers 
     physically and programmatically accessible to individuals 
     with disabilities;
       ``(iv) sharing evidence-based and promising practices among 
     the vocational rehabilitation programs;
       ``(v) maintaining an accessible website that includes links 
     to--

       ``(I) the vocational rehabilitation programs;
       ``(II) appropriate Federal departments and agencies, and 
     private associations;
       ``(III) State assistive technology device and assistive 
     technology service demonstration programs, device loan 
     programs, device reutilization programs, alternative 
     financing systems, or State financing activities, operated 
     through, or independently of, comprehensive statewide 
     programs of technology-related assistance carried out under 
     section 4 of the Assistive Technology Act of 1998 (29 U.S.C. 
     3003), telework programs, and other programs that provide 
     sources of funding for assistive technology devices; and
       ``(IV) various programs, including programs with tax 
     credits, available to employers for hiring or accommodating 
     employees who are individuals with disabilities;

       ``(vi) enhancing employment outcomes for individuals with 
     mental illness and individuals with cognitive disabilities;
       ``(vii) convening experts from the vocational 
     rehabilitation programs to discuss and make recommendations 
     with regard to the employment of individuals with 
     disabilities and national emerging issues of importance to 
     individuals with vocational rehabilitation needs;
       ``(viii) enabling the designated State agencies to provide 
     practical information on effective approaches for business 
     and industry to use in employing individuals with 
     disabilities, including provision of reasonable 
     accommodations;
       ``(ix) providing information on other emerging issues 
     concerning the delivery of publicly funded employment and 
     training services and supports to assist individuals with 
     disabilities to enter the workforce, achieve improved 
     outcomes, and become economically self-sufficient; and
       ``(x) carrying out such other activities as the Secretary 
     may require.
       ``(2) Eligible entities.--To be eligible to receive a 
     grant, contract, or cooperative agreement under this 
     subsection, an entity shall have (or agree to award a grant 
     or contract to an entity that has)--
       ``(A) experience and expertise in administering vocational 
     rehabilitation services;
       ``(B) documented experience with and knowledge about self-
     employment, business ownership, business development, and 
     other types of entrepreneural employment opportunities and 
     outcomes for individuals with disabilities, providing 
     transition services for students with disabilities, and 
     assistive technology; and
       ``(C) the expertise necessary to identify the additional 
     data elements needed to provide comprehensive reporting of 
     activities and outcomes of the vocational rehabilitation 
     programs authorized under title I, and experience in 
     utilizing data to provide annual reports.
       ``(3) Collaboration.--In developing and providing training 
     and technical assistance under this subsection, a recipient 
     of a grant, contract, or cooperative agreement under this 
     subsection shall collaborate with other organizations, in 
     particular--
       ``(A) agencies carrying out vocational rehabilitation 
     programs under title I and national organizations 
     representing such programs;
       ``(B) organizations representing individuals with 
     disabilities;
       ``(C) organizations representing State officials and 
     agencies engaged in the delivery of assistive technology;
       ``(D) relevant employees from Federal departments and 
     agencies, other than the Department of Education;
       ``(E) representatives of businesses;
       ``(F) individuals with disabilities who use assistive 
     technology and understand the barriers to the acquisition of 
     such technology and assistive technology services; and
       ``(G) family members, guardians, advocates, and authorized 
     representatives of such individuals.'';
       (4) by inserting after subsection (g), as redesignated by 
     paragraph (2), the following:
       ``(h) Access to Telework.--
       ``(1) Definition of telework.--In this subsection, the term 
     `telework' means work from home and other telework sites with 
     the assistance of a computer and with reasonable 
     accommodations, including the necessary equipment to 
     facilitate successful work from home and other telework 
     sites.
       ``(2) Authorization of program.--The Commissioner is 
     authorized to make grants to States and governing bodies of 
     Indian tribes located on Federal and State reservations (and 
     consortia of such governing bodies) to pay for the Federal 
     share of the cost of establishing or expanding a telework 
     program.
       ``(3) Application.--A State or Indian tribe that desires to 
     receive a grant under this subsection shall submit an 
     application to the Commissioner at such time, in such manner, 
     and containing such information as the Commissioner may 
     require.
       ``(4) Use of funds.--
       ``(A) In general.--A State or Indian tribe that receives a 
     grant under this subsection shall establish or expand a 
     telework program that shall provide assistance through loans 
     or other alternative financing mechanisms to individuals with 
     disabilities. The State or Indian tribe shall provide the 
     assistance through the program to enable such individuals to 
     purchase computers or other equipment, including adaptive 
     equipment, to facilitate access to employment and enhance 
     employment outcomes by providing the individual with the 
     opportunity--
       ``(i) to work from home or other telework sites so that 
     such individuals are able to telework; or
       ``(ii) to become self-employed on a full-time or part-time 
     basis from home or other telework sites.
       ``(B) Development of telework opportunities and business 
     plans.--A State or Indian tribe that receives a grant under 
     this subsection may use not more than 10 percent of the grant 
     award to develop telework opportunities with employers and 
     assist in the development of business plans for individuals 
     with disabilities interested in self-employment, before such 
     individuals apply for assistance through the telework 
     program.
       ``(C) Self employment.--A State or Indian tribe that 
     receives a grant under this subsection shall enter into 
     cooperative agreements with small business development 
     centers for the development of business plans as described in 
     section 103(a)(13) for individuals described in subparagraph 
     (B), and provide assurances that the State or Indian tribe 
     will, through plans to achieve self-support, vocational 
     rehabilitation services, or other means, identify ways for 
     the individuals described in subparagraph (B) to pay for the 
     development of business plans, before such individuals apply 
     for assistance through the telework program.
       ``(D) Definitions.--In this paragraph:
       ``(i) Plan to achieve self-support.--The term `plan to 
     achieve self-support' means a plan described in sections 
     416.1180 through 416.1182 of title 20, Code of Federal 
     Regulations (or any corresponding similar regulation or 
     ruling).
       ``(ii) Small business development center.--The term `small 
     business development center' means a center established under 
     section 21 of the Small Business Act (15 U.S.C. 648).
       ``(5) Federal share.--The Federal share of the cost of 
     establishing or expanding a telework program under this 
     section shall be 10 percent of the cost.
       ``(6) Existing grant recipients.--An entity that receives a 
     grant under the Access to Telework Fund Program under 
     subsection (b) for a fiscal year may use the funds made 
     available through that grant for that fiscal year in 
     accordance with this subsection rather than subsection (b).
       ``(7) Annual report.--
       ``(A) In general.--A State or Indian tribe that receives a 
     grant under this subsection shall prepare and submit an 
     annual report to the Commissioner.
       ``(B) Contents.--The report under subparagraph (A) shall 
     include the following:
       ``(i) Information on the characteristics of each individual 
     with a disability that receives assistance through a loan or 
     other alternative financing mechanism under the program, 
     including information about the individual such as the 
     following:

       ``(I) Age.
       ``(II) Ethnicity.
       ``(III) Employment status at the time of application for 
     assistance through a loan or other alternative financing 
     mechanism under this subsection.
       ``(IV) Whether the individual attempted to secure financial 
     support from other sources to enable the individual to 
     telework and, if so, a description of such sources.
       ``(V) Whether the individual is working and, if so, whether 
     the individual teleworks, the occupation in which the 
     individual is working, the hourly salary the individual 
     receives, and the hourly salary of the individual prior to 
     receiving assistance through a loan or other alternative 
     financing mechanism under the program.
       ``(VI) Whether the individual has repaid assistance from 
     the loan or other alternative financing mechanism received 
     under the program, is in repayment status, is delinquent on 
     repayments, or has defaulted on the assistance from the loan 
     or other alternative financing mechanism.

       ``(ii) An analysis of the individuals with disabilities 
     that have benefited from the program.
       ``(iii) Any other information that the Commissioner may 
     require.''; and
       (5) in subsection (i), as redesignated by paragraph (2)--
       (A) by striking ``this section'' and inserting ``this 
     section (other than subsections (c) and (d))''; and
       (B) by striking ``fiscal years 1999 through 2003'' and 
     inserting ``fiscal years 2006 through 2011''.

     SEC. 443. DISABILITY CAREER PATHWAYS PROGRAM.

       Section 303 of the Rehabilitation Act of 1973 (29 U.S.C. 
     773) is amended--
       (1) by redesignating subsection (i) (as redesignated by 
     section 442(2) as subsection (j); and

[[Page 9593]]

       (2) by inserting after subsection (h) the following new 
     subsection:
       ``(i) Grants for Disability Career Pathways Program.--
       ``(1) Definitions.--In this subsection:
       ``(A) Assistive technology.--The term `assistive 
     technology' has the meaning given the term in section 3 of 
     the Assistive Technology Act of 1998 (29 U.S.C. 3002).
       ``(B) Center for independent living.--The term `center for 
     independent living' means a center for independent living 
     funded under subtitle C of title VII.
       ``(C) Covered institution.--The term `covered institution' 
     means--
       ``(i) a secondary school; and
       ``(ii) in the discretion of the eligible consortium 
     involved, an institution of higher education.
       ``(D) Eligible consortium.--The term `eligible consortium' 
     means a consortium described in paragraph (3)(A).
       ``(E) Secondary school.--The term `secondary school' has 
     the meaning given the term in section 9101 of the Elementary 
     and Secondary Education Act of 1965 (20 U.S.C. 7801).
       ``(2) Purpose of program.--The Commissioner may establish a 
     Disability Career Pathways program, through which the 
     Commissioner may make grants, for periods of up to 5 years, 
     to institutions of higher education that establish eligible 
     consortia, to enable the consortia to develop and carry out 
     training and education related to disability studies and 
     leadership development. The consortia shall provide the 
     training and education for the purpose of providing career 
     pathways for students at a covered institution, in fields 
     pertinent to individuals with disabilities, and particularly 
     pertinent to the employment of individuals with disabilities.
       ``(3) Application.--To be eligible to receive a grant under 
     this subsection on behalf of a consortium, an institution of 
     higher education shall submit an application to the Secretary 
     at such time, in such manner, and containing such information 
     as the Secretary may require, including information 
     demonstrating--
       ``(A) that the institution of higher education has 
     established a consortium of members that represent--
       ``(i) the institution of higher education;
       ``(ii) a community college;
       ``(iii) a secondary school;
       ``(iv) a center for independent living;
       ``(v) a designated State agency;
       ``(vi) a one-stop center established under section 121(e) 
     of the Workforce Investment Act of 1998 (29 U.S.C. 2841(e)); 
     and
       ``(vii) the local business community;
       ``(B) the collaborative working relationships between the 
     institution of higher education and the other members of the 
     consortium, and describing the activities that each member 
     shall undertake; and
       ``(C) the capacity and expertise of the institution of 
     higher education--
       ``(i) to coordinate training and education related to 
     disability studies and leadership development with 
     educational institutions and disability-related 
     organizations; and
       ``(ii) to conduct such training and education effectively.
       ``(4) Distribution of grants.--In making grants under this 
     subsection, the Commissioner shall ensure that the grants 
     shall be distributed for a geographically diverse set of 
     eligible consortia throughout all regions.
       ``(5) Mandatory uses of funds.--An institution of higher 
     education that receives a grant under this subsection on 
     behalf of a consortium shall ensure that the consortium shall 
     use the grant funds to--
       ``(A) encourage interest in, enhance awareness and 
     understanding of, and provide educational opportunities in, 
     disability-related fields, and encourage leadership 
     development among students at a covered institution, 
     including such students who are individuals with 
     disabilities;
       ``(B) enable the students at a covered institution to gain 
     practical skills and identify work experience opportunities, 
     including opportunities developed by the consortium in 
     conjunction with the private sector, that benefit individuals 
     with disabilities;
       ``(C) develop postsecondary school career pathways leading 
     to gainful employment, the attainment of an associate or 
     baccalaureate degree, or the completion of further coursework 
     or a further degree, in a disability-related field;
       ``(D) offer credit-bearing, college-level coursework in a 
     disability-related field to qualified students at a covered 
     institution; and
       ``(E) ensure faculty and staff employed by the members are 
     available to students at a covered institution for 
     educational and career advising, and to teachers and staff at 
     a covered institution for disability-related training.
       ``(6) Permissible uses of funds.--An institution of higher 
     education that receives a grant under this subsection on 
     behalf of a consortium may permit the consortium to use the 
     grant funds to assess the feasibility of developing or 
     adapting disabilities studies curricula, including curricula 
     with distance learning opportunities, for use at institutions 
     of higher education.
       ``(7) Consultation.--The consortium shall consult with 
     appropriate agencies that serve or assist individuals with 
     disabilities, and the parents, family members, guardians, 
     advocates, or authorized representatives of the individuals, 
     located in the jurisdiction served by the consortium, 
     concerning the program of education and training carried out 
     by the consortium.
       ``(8) Reviews.--
       ``(A) Advisory committee.--For an institution of higher 
     education to be eligible to receive a grant under this 
     subsection on behalf of a consortium, the consortium shall 
     have an advisory committee that consists of members that 
     represent the interests of individuals with disabilities, 
     including--
       ``(i) a professional in the field of vocational 
     rehabilitation;
       ``(ii) an individual with a disability or a family member 
     of such an individual; and
       ``(iii) a representative of each type of entity or 
     community represented on the consortium.
       ``(B) Quarterly reviews.--The advisory committee shall meet 
     at least once during each calendar quarter to conduct a 
     review of the program of education and training carried out 
     by the consortium. The committee shall directly advise the 
     governing board of the institution of higher education in the 
     consortium about the views and recommendations of the 
     advisory committee resulting from the review.
       ``(9) Accountability.--Every 2 years, the Commissioner 
     shall--
       ``(A) using information collected from the reviews required 
     in paragraph (8), assess the effectiveness of the Disability 
     Career Pathways program carried out under this subsection, 
     including assessing how many individuals were served by each 
     eligible consortium and how many of those individuals 
     received postsecondary education, or entered into employment, 
     in a disability-related field; and
       ``(B) prepare and submit to Congress a report containing 
     the results of the assessments described in subparagraph 
     (A).''.

     SEC. 444. MIGRANT AND SEASONAL FARMWORKERS.

       Section 304(b) of the Rehabilitation Act of 1973 (29 U.S.C. 
     774(b)) is amended by striking ``fiscal years 1999 through 
     2003'' and inserting ``fiscal years 2006 through 2011''.

     SEC. 445. RECREATIONAL PROGRAMS.

       Section 305 of the Rehabilitation Act of 1973 (29 U.S.C. 
     775) is amended--
       (1) in subsection (a)(1)(B), by striking ``construction of 
     facilities for aquatic rehabilitation therapy,''; and
       (2) in subsection (b), by striking ``fiscal years 1999 
     through 2003'' and inserting ``fiscal years 2006 through 
     2011''.

               Subtitle D--National Council on Disability

     SEC. 451. AUTHORIZATION OF APPROPRIATIONS.

       Section 405 of the Rehabilitation Act of 1973 (29 U.S.C. 
     785) is amended by striking ``fiscal years 1999 through 
     2003'' and inserting ``fiscal years 2006 through 2011''.

                    Subtitle E--Rights and Advocacy

     SEC. 461. ARCHITECTURAL AND TRANSPORTATION BARRIERS 
                   COMPLIANCE BOARD.

       Section 502(j) of the Rehabilitation Act of 1973 (29 U.S.C. 
     792(j)) is amended by striking ``fiscal years 1999 through 
     2003'' and inserting ``fiscal years 2006 through 2011''.

     SEC. 462. PROTECTION AND ADVOCACY OF INDIVIDUAL RIGHTS.

       Section 509 of the Rehabilitation Act of 1973 (29 U.S.C. 
     794e) is amended--
       (1) in subsection (c)(1)(A), by inserting ``a grant for'' 
     after ``to provide'';
       (2) in subsection (g)(2), by striking ``was paid'' and 
     inserting ``was paid, except that program income generated 
     from the amount paid to an eligible system shall remain 
     available to such system until expended''; and
       (3) in subsection (l), by striking ``fiscal years 1999 
     through 2003'' and inserting ``fiscal years 2006 through 
     2011''.

 Subtitle F--Employment Opportunities for Individuals With Disabilities

     SEC. 471. PROJECTS WITH INDUSTRY.

       Section 611(a) of the Rehabilitation Act of 1973 (29 U.S.C. 
     795(a)) is amended--
       (1) in paragraph (1), by inserting ``, locally and 
     nationally'' before the period at the end; and
       (2) in paragraph (2)--
       (A) in the matter preceding subparagraph (A), by inserting 
     ``local and national'' before ``Projects With Industry''; and
       (B) in subparagraph (A)--
       (i) in clause (iii), by striking ``and'' after the 
     semicolon;
       (ii) in clause (iv), by inserting ``and'' after the 
     semicolon; and
       (iii) by adding at the end the following:
       ``(v) coordinate activities with the Job Corps center 
     industry councils established under section 154 of the 
     Workforce Investment Act of 1998 (29 U.S.C. 2894);''.

     SEC. 472. PROJECTS WITH INDUSTRY AUTHORIZATION OF 
                   APPROPRIATIONS.

       Section 612 of the Rehabilitation Act of 1973 (29 U.S.C. 
     795a) is amended by striking ``fiscal years 1999 through 
     2003'' and inserting ``fiscal years 2006 through 2011''.

     SEC. 473. SERVICES FOR INDIVIDUALS WITH SIGNIFICANT 
                   DISABILITIES AUTHORIZATION OF APPROPRIATIONS.

       Section 628 of the Rehabilitation Act of 1973 (29 U.S.C. 
     795n) is amended by striking ``fiscal years 1999 through 
     2003'' and inserting ``fiscal years 2006 through 2011''.

[[Page 9594]]



  Subtitle G--Independent Living Services and Centers for Independent 
                                 Living

     SEC. 481. STATE PLAN.

       Section 704 of the Rehabilitation Act of 1973 (42 U.S.C. 
     795c) is amended by adding at the end the following:
       ``(o) Promoting Full Access to Community Life.--
       ``(1) In general.--The plan shall describe how the State 
     will provide independent living services that promote full 
     access to community life for individuals with significant 
     disabilities.
       ``(2) Services.--The services shall include, as 
     appropriate--
       ``(A) facilitating transitions of--
       ``(i) youth who are individuals with significant 
     disabilities and have completed individualized education 
     programs under section 614(d) of the Individuals with 
     Disabilities Education Act (20 U.S.C. 1414(d)) to 
     postsecondary life, including employment; and
       ``(ii) individuals with significant disabilities from 
     nursing homes and other institutions, including institutions 
     serving individuals with cognitive disabilities, to 
     community-based residences;
       ``(B) assisting individuals with significant disabilities 
     at risk of entering institutions to remain in the community; 
     and
       ``(C) promoting home ownership among individuals with 
     significant disabilities.''.

     SEC. 482. STATEWIDE INDEPENDENT LIVING COUNCIL.

       Section 705(b) of the Rehabilitation Act of 1973 (29 U.S.C. 
     796d(b)) is amended--
       (1) in paragraph (2), by striking subparagraph (C) and 
     inserting the following:
       ``(C) in a State in which 1 or more projects provide 
     services under section 121, not less than 1 representative of 
     the directors of the projects.''; and
       (2) by striking paragraph (5) and inserting the following:
       ``(5) Chairperson.--The Council shall select a chairperson 
     from among the voting membership of the Council.''.

     SEC. 483. INDEPENDENT LIVING SERVICES AUTHORIZATION OF 
                   APPROPRIATIONS.

       Section 714 of the Rehabilitation Act of 1973 (29 U.S.C. 
     796e-3) is amended by striking ``fiscal years 1999 through 
     2003'' and inserting ``fiscal years 2006 through 2011''.

     SEC. 484. PROGRAM AUTHORIZATION.

       Section 721 of the Rehabilitation Act of 1973 (42 U.S.C. 
     796f) is amended--
       (1) by striking subsection (c) and inserting the following:
       ``(c) Allotments to States.--
       ``(1) Definitions.--In this subsection:
       ``(A) Additional appropriation.--The term `additional 
     appropriation' means the amount (if any) by which the 
     appropriation for a fiscal year exceeds the total of--
       ``(i) the amount reserved under subsection (b) for that 
     fiscal year; and
       ``(ii) the appropriation for fiscal year 2003.
       ``(B) Appropriation.--The term `appropriation' means the 
     amount appropriated to carry out this part.
       ``(C) Base appropriation.--The term `base appropriation' 
     means the portion of the appropriation for a fiscal year that 
     is equal to the lesser of--
       ``(i) an amount equal to 100 percent of the appropriation, 
     minus the amount reserved under subsection (b) for that 
     fiscal year; or
       ``(ii) the appropriation for fiscal year 2003.
       ``(2) Allotments to states from base appropriation.--After 
     the reservation required by subsection (b) has been made, the 
     Commissioner shall allot to each State whose State plan has 
     been approved under section 706 an amount that bears the same 
     ratio to the base appropriation as the amount the State 
     received under this subsection for fiscal year 2003 bears to 
     the total amount that all States received under this 
     subsection for fiscal year 2003.
       ``(3) Allotments to states of additional appropriation.--
     From any additional appropriation for each fiscal year, the 
     Commissioner shall allot to each State whose State plan has 
     been approved under section 706 an amount equal to the sum 
     of--
       ``(A) an amount that bears the same ratio to 50 percent of 
     the additional appropriation as the population of the State 
     bears to the population of all States; and
       ``(B) \1/56\ of 50 percent of the additional 
     appropriation.''; and
       (2) by adding at the end the following:
       ``(e) Carryover Authority.--Notwithstanding any other 
     provision of law--
       ``(1) any funds appropriated for a fiscal year to carry out 
     a grant program under section 722 or 723, that are not 
     obligated and expended by recipients prior to the beginning 
     of the succeeding fiscal year shall remain available for 
     obligation and expenditure by such recipients during that 
     succeeding fiscal year and the subsequent fiscal year; and
       ``(2) any amounts of program income received by recipients 
     under a grant program under section 722 or 723 in a fiscal 
     year, that are not obligated and expended by recipients prior 
     to the beginning of the succeeding fiscal year, shall remain 
     available for obligation and expenditure by such recipients 
     during that succeeding fiscal year and the subsequent fiscal 
     year.''.

     SEC. 485. GRANTS TO CENTERS FOR INDEPENDENT LIVING IN STATES 
                   IN WHICH FEDERAL FUNDING EXCEEDS STATE FUNDING.

       Section 722(c) of the Rehabilitation Act of 1973 (29 U.S.C. 
     796f-1(c)) is amended--
       (1) by striking ``grants'' and inserting ``grants for a 
     fiscal year''; and
       (2) by striking ``by September 30, 1997'' and inserting 
     ``for the preceding fiscal year''.

     SEC. 486. GRANTS TO CENTERS FOR INDEPENDENT LIVING IN STATES 
                   IN WHICH STATE FUNDING EQUALS OR EXCEEDS 
                   FEDERAL FUNDING.

       Section 723(c) of the Rehabilitation Act of 1973 (29 U.S.C. 
     796f-2(c)) is amended--
       (1) by striking ``grants'' and inserting ``grants for a 
     fiscal year''; and
       (2) by striking ``by September 30, 1997'' and inserting 
     ``for the preceding fiscal year''.

     SEC. 487. STANDARDS AND ASSURANCES FOR CENTERS FOR 
                   INDEPENDENT LIVING.

       Section 725(b) of the Rehabilitation Act of 1973 (29 U.S.C. 
     796f-4(b)) is amended by adding at the end the following:
       ``(8) Promoting full access to community life.--
       ``(A) In general.--The center shall provide independent 
     living services that promote full access to community life 
     for individuals with significant disabilities.
       ``(B) Services.--The services shall include, as 
     appropriate--
       ``(i) facilitating transitions of--

       ``(I) youth who are individuals with significant 
     disabilities and have completed individualized education 
     programs under section 614(d) of the Individuals with 
     Disabilities Education Act (20 U.S.C. 1414(d)) to 
     postsecondary life, including employment; and
       ``(II) individuals with significant disabilities from 
     nursing homes and other institutions, including institutions 
     serving individuals with cognitive disabilities, to 
     community-based residences;

       ``(ii) assisting individuals with significant disabilities 
     at risk of entering institutions to remain in the community; 
     and
       ``(iii) promoting home ownership among individuals with 
     significant disabilities.''.

     SEC. 488. CENTERS FOR INDEPENDENT LIVING AUTHORIZATION OF 
                   APPROPRIATIONS.

       Section 727 of the Rehabilitation Act of 1973 (29 U.S.C. 
     796f-6) is amended by striking ``fiscal years 1999 through 
     2003'' and inserting ``fiscal years 2006 through 2011''.

     SEC. 489. INDEPENDENT LIVING SERVICES FOR OLDER INDIVIDUALS 
                   WHO ARE BLIND.

       Chapter 2 of title VII of the Rehabilitation Act of 1973 
     (29 U.S.C. 796j et seq.) is amended--
       (1) by redesignating sections 752 and 753 as sections 753 
     and 754, respectively; and
       (2) by inserting after section 751 the following:

     ``SEC. 752. TRAINING AND TECHNICAL ASSISTANCE.

       ``(a) Grants; Contracts; Other Arrangements.--For any 
     fiscal year for which the funds appropriated to carry out 
     this chapter exceed the funds appropriated to carry out this 
     chapter for fiscal year 2003, the Commissioner shall first 
     reserve from such excess, to provide training and technical 
     assistance to designated State agencies for such fiscal year, 
     not less than 1.8 percent, and not more than 2 percent, of 
     the funds appropriated to carry out this chapter for the 
     fiscal year involved.
       ``(b) Allocation.--From the funds reserved under subsection 
     (a), the Commissioner shall make grants to, and enter into 
     contracts and other arrangements with, entities that 
     demonstrate expertise in the provision of services to older 
     individuals who are blind to provide training and technical 
     assistance with respect to planning, developing, conducting, 
     administering, and evaluating independent living programs for 
     older individuals who are blind.
       ``(c) Funding Priorities.--The Commissioner shall conduct a 
     survey of designated State agencies that receive grants under 
     section 753 regarding training and technical assistance needs 
     in order to determine funding priorities for grants, 
     contracts, and other arrangements under this section.
       ``(d) Review.--To be eligible to receive a grant or enter 
     into a contract or other arrangement under this section, an 
     entity shall submit an application to the Commissioner at 
     such time, in such manner, containing a proposal to provide 
     such training and technical assistance, and containing such 
     additional information as the Commissioner may require.
       ``(e) Prohibition on Combined Funds.--No funds reserved by 
     the Commissioner under this section may be combined with 
     funds appropriated under any other Act or part of this Act if 
     the purpose of combining funds is to make a single 
     discretionary grant or a single discretionary payment, unless 
     such reserved funds are separately identified in the 
     agreement for such grant or payment and are used for the 
     purposes of this chapter.''.

     SEC. 490. PROGRAM OF GRANTS.

       Section 753 of the Rehabilitation Act of 1973, as 
     redesignated by section 489, is amended--
       (1) by striking subsection (h);
       (2) by redesignating subsections (i) and (j) as subsections 
     (h) and (i), respectively;
       (3) in subsection (b), by striking ``section 753'' and 
     inserting ``section 754'';
       (4) in subsection (c)--
       (A) in paragraph (1), by striking ``section 753'' and 
     inserting ``section 754''; and

[[Page 9595]]

       (B) in paragraph (2)--
       (i) by striking ``subsection (j)'' and inserting 
     ``subsection (i)''; and
       (ii) by striking ``subsection (i)'' and inserting 
     ``subsection (h)'';
       (5) in subsection (g), by inserting ``, or contracts 
     with,'' after ``grants to'';
       (6) in subsection (h), as redesignated by paragraph (2)--
       (A) in paragraph (1), by striking ``subsection (j)(4)'' and 
     inserting ``subsection (i)(4)''; and
       (B) in paragraph (2)--
       (i) in subparagraph (A)(vi), by adding ``and'' after the 
     semicolon;
       (ii) in subparagraph (B)(ii)(III), by striking ``; and'' 
     and inserting a period; and
       (iii) by striking subparagraph (C); and
       (7) in subsection (i), as redesignated by paragraph (2)--
       (A) by striking paragraph (2) and inserting the following:
       ``(2) Minimum allotment.--
       ``(A) States.--In the case of any of the several States, 
     the District of Columbia, or the Commonwealth of Puerto Rico, 
     the amount referred to in paragraph (1)(A) for a fiscal year 
     is the greater of--
       ``(i) $350,000;
       ``(ii) an amount equal to the amount the State, the 
     District of Columbia, or the Commonwealth of Puerto Rico 
     received to carry out this chapter for fiscal year 2003; or
       ``(iii) an amount equal to \1/3\ of 1 percent of the amount 
     appropriated under section 754, and not reserved under 
     section 752, for the fiscal year and available for allotments 
     under subsection (a).
       ``(B) Certain territories.--In the case of Guam, American 
     Samoa, the United States Virgin Islands, or the Commonwealth 
     of the Northern Mariana Islands, the amount referred to in 
     paragraph (1)(A) for a fiscal year is $60,000.'';
       (B) in paragraph (3)(A), by striking ``section 753'' and 
     inserting ``section 754, and not reserved under section 
     752,''; and
       (C) in paragraph (4)(B)(i), by striking ``subsection (i)'' 
     and inserting ``subsection (h)''.

     SEC. 491. INDEPENDENT LIVING SERVICES FOR OLDER INDIVIDUALS 
                   WHO ARE BLIND AUTHORIZATION OF APPROPRIATIONS.

       Section 754 of the Rehabilitation Act of 1973, as 
     redesignated by section 489, is amended by striking ``fiscal 
     years 1999 through 2003'' and inserting ``fiscal years 2006 
     through 2011''.

                       Subtitle H--Miscellaneous

     SEC. 495. HELEN KELLER NATIONAL CENTER ACT.

       (a) General Authorization of Appropriations.--The first 
     sentence of section 205(a) of the Helen Keller National 
     Center Act (29 U.S.C. 1904(a)) is amended by striking ``1999 
     through 2003'' and inserting ``2006 through 2011''.
       (b) Helen Keller National Center Federal Endowment Fund.--
     The first sentence of section 208(h) of the Helen Keller 
     National Center Act (29 U.S.C. 1907(h)) is amended by 
     striking ``1999 through 2003'' and inserting ``2006 through 
     2011''.

                 TITLE V--TRANSITION AND EFFECTIVE DATE

     SEC. 501. TRANSITION PROVISIONS.

       The Secretary of Labor shall, at the discretion of the 
     Secretary, take such actions as the Secretary determines to 
     be appropriate to provide for the orderly implementation of 
     titles I and III of this Act. The Secretary of Education 
     shall, at the discretion of the Secretary, take such actions 
     as the Secretary determines to be appropriate to provide for 
     the orderly implementation of titles II and IV of this Act.

     SEC. 502. EFFECTIVE DATE.

       Except as otherwise provided in this Act, this Act and the 
     amendments made by this Act shall take effect on the date of 
     enactment of this Act.

  Mr. KENNEDY. Mr. President, It is a privilege to join my colleagues 
in introducing this bipartisan bill to reauthorize the Workforce 
Investment Act and increase the opportunities for workers to obtain the 
services and training they need to hold good jobs in the years ahead.
  This bill strengthens the current One-Stop system we established in 
1998, so that many more people can be served. The bill creates stronger 
partnerships with businesses to recruit new workers, collaborate in 
training current workers, improve career ladder opportunities, and work 
with local leaders to meet the changing needs of their community.
  The One-Stop system is needed more than ever now, to serve hard-
working Americans who have lost their jobs through no fault of their 
own as we struggle to rebuild our economy and adjust to the new century 
and the globalization forces that are transforming our society and our 
workforce. Current employees, especially the growing number of 
manufacturing workers, need effective training to be eligible for the 
available jobs in their area.
  We have also worked to remove the sequencing of services for persons 
entering the workforce who face barriers to employment. Providers can 
move adults directly to skills training, or create training programs 
that include literacy and language skills as well, so that job training 
is not delayed.
  The bill also encourages local providers to continue the training 
programs until employees can be self-sufficient. For those who start on 
the minimum wage, the support system should be there to help them 
qualify for the better-paying jobs that will enable them to support 
their families. Some men and women may obtain their first job through 
the system, and continue to participate as they move up their career 
ladders.
  The bill will also help young people. Last summer, the youth 
unemployment rate rose to 17 percent and we were all acutely aware of 
the special challenges that young workers face in this economy. The 
youth program will continue to work with both in-school and out-of-
school young men and women to help them obtain the education and the 
real job experience they need to be competitive.
  The bill pays particular attention to the needs of people with 
disabilities. Their access to the program is essential if the system is 
to be truly universal. It's unacceptable today that hundreds of 
thousands of people with disabilities are unable to find employment. 
Workforce training programs must coordinate with vocational 
rehabilitation programs to provide many more opportunities for those 
with physical and mental challenges.
  For over thirty years, since the Vocational Rehabilitation Act was 
first enacted in 1973, state vocational rehabilitation programs have 
brought new hope to individuals with disabilities throughout the 
country, so that they can reach their full potential and actively 
participate in their communities.
  Through vocational rehabilitation, individuals with disabilities can 
obtain the training, counseling, support and job opportunities they 
need in order to have independent, productive, and fulfilling lives. 
For millions of these Americans, vocational rehabilitation is the 
difference between dependence and independence, between lost potential 
and a productive career.
  In 1998, vocational rehabilitation became part of the state-wide 
workforce system in each state. This reauthorization will strengthen 
that partnership, so that many more working-age individuals with 
disabilities, even those with the most significant challenges, have 
realistic opportunities to obtain the services and support they need to 
reach their employment goals.
  The legislation also strengthens other aspects of independent living, 
so that students and adults with disabilities can receive the services 
and support they need for community-based living.
  Our goal in this reauthorization is to see that the talents and 
strengths of all individuals with disabilities are recognized, 
enhanced, and fairly rewarded in communities and workplaces across the 
nation.
  The bill also contains the Adult Literacy Act, which funds critical 
programs for states to assist adults in obtaining the basic reading, 
writing, numeracy and English language skills that they need to be full 
participants in the workplace and in society.
  We all know that education is the great equalizer. Improving basic 
literacy is a key component of job training. Large numbers of persons 
are on waiting lists across the country to be served under this 
program--25,000 people in Massachusetts alone--and we need to do more 
to serve adults who recognize their need to improve these skills in 
order to improve their lives.
  I commend my colleagues and the many organizations representing 
governors, mayors, county officials, youth, women, and low-income 
persons who were so actively involved in preparing this legislation. We 
have tried to listen carefully to the many leaders who have practical 
experience in implementing these laws.
  I look forward to continuing this bipartisan effort and to the early 
enactment of this needed legislation.

[[Page 9596]]


                                 ______
                                 
      By Mr. SMITH (for himself, Mrs. Lincoln, and Mr. Grassley):
  S. 1022. A bill to amend the Internal Revenue Code of 1986 to allow 
for an energy efficient appliance credit; to the Committee on Finance.
  Mr. SMITH. Mr. President, water and energy are precious resources 
that we must manage as efficiently as possible. That is why I am 
joining with my colleagues Senator Lincoln and Finance Chairman 
Grassley to introduce the ``Resource Efficient Appliance Incentives Act 
of 2005.'' This bill would provide for manufacturers' tax credits of 
varying levels for certain energy and water efficient home appliances.
  Under this bill, for the first time, water efficiency is included in 
the eligibility criteria for the tax credits for clothes washers. This 
bill provides graduated credits to appliance manufacturers. The more 
efficient the dishwasher, clothes washer or refrigerator, the higher 
the credit.
  To spur increased production, the bill provides that these tax 
credits would apply only to production that exceeds historical 
production levels, and requires a three-year rolling average to 
calculated this production baseline. The bill only applies to 
appliances manufactured in the United States. This will encourage 
innovation and investment in domestic manufacturing facilities, which 
employ about 95,000 Americans.
  Energy savings from this bill would be significant. Super-energy 
efficient and water conserving clothes washers would have to use at 
least 65 percent less energy than the 2004 federal standard to qualify 
for the higher credit. Refrigerators must exceed the 2001 energy 
conservation standards for comparably sized models by at least 15 
percent to receive a credit under this bill.
  This bill will not only save energy, and reduce the consumers' energy 
bills over the life of the appliance. It is estimated that, over twenty 
years, the credit would reduce the amount of water used to wash clothes 
by approximately a trillion gallons, the amount used in two years by a 
city the size of Phoenix, Arizona.
  In several parts of the country, development is constrained by the 
lack of good quality water and water infrastructure. Having dealt with 
the water crisis in the Klamath Basin in 2001, when 1,200 farmers and 
ranchers had their irrigation water cut off, I can tell you firsthand 
that the conflicts between competing human and environmental needs are 
real and are growing.
  As Benjamin Franklin observed, ``When the well is dry, we know the 
worth of water.'' In many parts of the arid west, the well is running 
dry on a regular basis. The 10-year drought in the Colorado River 
Basin, which has seen relief this year, had produced the lowest flows 
on record last year, straining an important resource for millions of 
people. The Columbia River Basin has also experienced below average 
flows in recent years.
  The daily per capita water use around the world varies significantly. 
The U.N. Population Fund cites that, in the United States, we use an 
estimated 152 gallons per day per person, while in the United Kingdom 
they use 88 gallons. Africans use 12 gallons a day.
  According to the Rocky Mountain Institute, 47 percent of all water 
supplied to communities in the United States by public and private 
utilities is for residential water use. Of that, clothes washers 
account for approximately 22 percent of residential use, while 
dishwashers account for about 3 percent.
  I firmly believe that we can use technology to improve our 
environmental stewardship. Water efficiency can extend our finite water 
supplies, and also reduce the amount of wastewater that communities 
must treat.
  I would urge my colleagues to join me in cosponsoring this important 
bill to provide incentives for water and energy efficient residential 
appliances. I ask unanimous consent that the text of legislation be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1022

       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 ``Resource Efficient Appliance 
     Incentives Act of 2005.''.

     SEC. 2. CREDIT FOR ENERGY EFFICIENT APPLIANCES.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     business-related credits) is amended by adding at the end the 
     following new section:

     ``SEC. 45J. ENERGY EFFICIENT APPLIANCE CREDIT.

       ``(a) General Rule.--
       ``(1) In general.--For purposes of section 38, the energy 
     efficient appliance credit determined under this section for 
     any taxable year is an amount equal to the sum of the credit 
     amounts determined under paragraph (2) for each type of 
     qualified energy efficient appliance produced by the taxpayer 
     during the calendar year ending with or within the taxable 
     year.
       ``(2) Credit amounts.--The credit amount determined for any 
     type of qualified energy efficient appliance is--
       ``(A) the applicable amount determined under subsection (b) 
     with respect to such type, multiplied by
       ``(B) the eligible production for such type.
       ``(b) Applicable Amount.--
       ``(1) In general.--For purposes of subsection (a)--
       ``(A) Dishwashers.--The applicable amount is the energy 
     savings amount in the case of a dishwasher which--
       ``(i) is manufactured in calendar year 2006 or 2007, and
       ``(ii) meets the requirements of the Energy Star program 
     which are in effect for dishwashers in 2007.
       ``(B) Clothes washers.--The applicable amount is--
       ``(i) $50, in the case of a clothes washer which--

       ``(I) is manufactured in calendar year 2005, and
       ``(II) has an MEF of at least 1.42,

       ``(ii) $100, in the case of a clothes washer which--

       ``(I) is manufactured in calendar year 2005, 2006, or 2007, 
     and
       ``(II) meets the requirements of the Energy Star program 
     which are in effect for clothes washers in 2007, and

       ``(iii) the energy and water savings amount, in the case of 
     a clothes washer which--

       ``(I) is manufactured in calendar year 2008, 2009, or 2010, 
     and
       ``(II) meets the requirements of the Energy Star program 
     which are in effect for clothes washers in 2010.

       ``(C) Refrigerators.--
       ``(i) 15 percent savings.--The applicable amount is $75 in 
     the case of a refrigerator which--

       ``(I) is manufactured in calendar year 2005 or 2006, and
       ``(II) consumes at least 15 percent less kilowatt hours per 
     year than the 2001 energy conservation standard.

       ``(ii) 20 percent savings.--In the case of a refrigerator 
     which consumes at least 20 percent less kilowatt hours per 
     year than the 2001 energy conservation standards, the 
     applicable amount is--

       ``(I) $125 for a refrigerator which is manufactured in 
     calendar year 2005, 2006, or 2007, and
       ``(II) $100 for a refrigerator which is manufactured in 
     calendar year 2008.

       ``(iii) 25 percent savings.--In the case of a refrigerator 
     which consumes at least 25 percent less kilowatt hours per 
     year than the 2001 energy conservation standards, the 
     applicable amount is--

       ``(I) $175 for a refrigerator which is manufactured in 
     calendar year 2005, 2006, or 2007, and
       ``(II) $150 for a refrigerator which is manufactured in 
     calendar year 2008, 2009, or 2010.

       ``(2) Energy savings amount.--For purposes of paragraph 
     (1)(A)--
       ``(A) In general.--The energy savings amount is the lesser 
     of--
       ``(i) the product of--

       ``(I) $3, and
       ``(II) 100 multiplied by the energy savings percentage, or

       ``(ii) $100.
       ``(B) Energy savings percentage.--For purposes of 
     subparagraph (A), the energy savings percentage is the ratio 
     of--
       ``(i) the EF required by the Energy Star program for 
     dishwashers in 2007 minus the EF required by the Energy Star 
     program for dishwashers in 2005, to
       ``(ii) the EF required by the Energy Star program for 
     dishwashers in 2007.
       ``(3) Energy and water savings amount.--For purposes of 
     paragraph (1)(B)(iii)--
       ``(A) In general.--The energy and water savings amount is 
     the lesser of--
       ``(i) the product of--

       ``(I) $10, and
       ``(II) 100 multiplied by the energy and water savings 
     percentage, or

       ``(ii) $200.
       ``(B) Energy and water savings percentage.--For purposes of 
     subparagraph (A), the energy and water savings percentage is 
     the average of the MEF savings percentage and the WF savings 
     percentage.
       ``(C) MEF savings percentage.--For purposes of this 
     subparagraph, the MEF savings percentage is the ratio of--

[[Page 9597]]

       ``(i) the MEF required by the Energy Star program for 
     clothes washers in 2010 minus the MEF required by the Energy 
     Star program for clothes washers in 2007, to
       ``(ii) the MEF required by the Energy Star program for 
     clothes washers in 2010.
       ``(D) WF savings percentage.--For purposes of this 
     subparagraph, the WF savings percentage is the ratio of--
       ``(i) the WF required by the Energy Star program for 
     clothes washers in 2010 minus the WF required by the Energy 
     Star program for clothes washers in 2007, to
       ``(ii) the WF required by the Energy Star program for 
     clothes washers in 2010.
       ``(c) Eligible Production.--
       ``(1) In general.--Except as provided in paragraphs (2) and 
     (3), the eligible production in a calendar year with respect 
     to each type of energy efficient appliance is the excess of--
       ``(A) the number of appliances of such type which are 
     produced by the taxpayer in the United States during such 
     calendar year, over
       ``(B) the average number of appliances of such type which 
     were produced by the taxpayer (or any predecessor) in the 
     United States during the preceding 3-calendar year period.
       ``(2) Special rule for refrigerators.--The eligible 
     production in a calendar year with respect to each type of 
     refrigerator described in subsection (b)(1)(C) is the excess 
     of--
       ``(A) the number of appliances of such type which are 
     produced by the taxpayer in the United States during such 
     calendar year, over
       ``(B) 110 percent of the average number of appliances of 
     such type which were produced by the taxpayer (or any 
     predecessor) in the United States during the preceding 3-
     calendar year period.
       ``(3) Special rule for 2005 production.--For purposes of 
     determining eligible production for calendar year 2005--
       ``(A) only production after the date of enactment of this 
     section shall be taken into account under paragraphs (1)(A) 
     and (2)(A), and
       ``(B) the amount taken into account under paragraphs (1)(B) 
     and (2)(B) shall be an amount which bears the same ratio to 
     the amount which would (but for this paragraph) be taken into 
     account under such paragraph as--
       ``(i) the number of days in calendar year 2005 after the 
     date of enactment of this section, bears to
       ``(ii) 365.
       ``(d) Types of Energy Efficient Appliance.--For purposes of 
     this section, the types of energy efficient appliances are--
       ``(1) dishwashers described in subsection (b)(1)(A),
       ``(2) clothes washers described in subsection (b)(1)(B)(i),
       ``(3) clothes washers described in subsection 
     (b)(1)(B)(ii),
       ``(4) clothes washers described in subsection 
     (b)(1)(B)(iii),
       ``(5) refrigerators described in subsection (b)(1)(C)(i),
       ``(6) refrigerators described in subsection 
     (b)(1)(C)(ii)(I),
       ``(7) refrigerators described in subsection 
     (b)(1)(C)(ii)(II),
       ``(8) refrigerators described in subsection 
     (b)(1)(C)(iii)(I), and
       ``(9) refrigerators described in subsection 
     (b)(1)(C)(iii)(II).
       ``(e) Limitations.--
       ``(1) Aggregate credit amount allowed.--The aggregate 
     amount of credit allowed under subsection (a) with respect to 
     a taxpayer for any taxable year shall not exceed $75,000,000 
     reduced by the amount of the credit allowed under subsection 
     (a) to the taxpayer (or any predecessor) for all prior 
     taxable years.
       ``(2) Amount allowed for certain appliances.--
       ``(A) In general.--In the case of appliances described in 
     subparagraph (C), the aggregate amount of the credit allowed 
     under subsection (a) with respect to a taxpayer for any 
     taxable year shall not exceed $20,000,000 reduced by the 
     amount of the credit allowed under subsection (a) to the 
     taxpayer (or any predecessor) for all prior taxable years 
     with respect to such appliances.
       ``(B) Election to increase allowable credit.--In the case 
     of any taxpayer who makes an election under this 
     subparagraph--
       ``(i) subparagraph (A) shall be applied by substituting 
     `$25,000,000' for `$20,000,000', and
       ``(ii) the aggregate amount of the credit allowed under 
     subsection (a) with respect to such taxpayer for any taxable 
     year for appliances described in subparagraph (C) and the 
     additional appliances described in subparagraph (D) shall not 
     exceed $50,000,000 reduced by the amount of the credit 
     allowed under subsection (a) to the taxpayer (or any 
     predecessor) for all prior taxable years with respect to such 
     appliances.
       ``(C) Appliances described.--The appliances described in 
     this subparagraph are--
       ``(i) clothes washers described in subsection (b)(1)(B)(i), 
     and
       ``(ii) refrigerators described in subsection (b)(1)(C)(i).
       ``(D) Additional appliances.--The additional appliances 
     described in this subparagraph are--
       ``(i) refrigerators described in subsection 
     (b)(1)(C)(ii)(I), and
       ``(ii) refrigerators described in subsection 
     (b)(1)(C)(ii)(II).
       ``(3) Limitation based on gross receipts.--The credit 
     allowed under subsection (a) with respect to a taxpayer for 
     the taxable year shall not exceed an amount equal to 2 
     percent of the average annual gross receipts of the taxpayer 
     for the 3 taxable years preceding the taxable year in which 
     the credit is determined.
       ``(4) Gross receipts.--For purposes of this subsection, the 
     rules of paragraphs (2) and (3) of section 448(c) shall 
     apply.
       ``(f) Definitions.--For purposes of this section--
       ``(1) Qualified energy efficient appliance.--The term 
     `qualified energy efficient appliance' means--
       ``(A) any dishwasher described in subsection (b)(1)(A),
       ``(B) any clothes washer described in subsection (b)(1)(B), 
     and
       ``(C) any refrigerator described in subsection (b)(1)(C).
       ``(2) Dishwasher.--The term `dishwasher' means a 
     residential dishwasher subject to the energy conservation 
     standards established by the Department of Energy.
       ``(3) Clothes washer.--The term `clothes washer' means a 
     residential model clothes washer, including a residential 
     style coin operated washer.
       ``(4) Refrigerator.--The term `refrigerator' means a 
     residential model automatic defrost refrigerator-freezer 
     which has an internal volume of at least 16.5 cubic feet.
       ``(5) MEF.--The term `MEF' means the modified energy factor 
     established by the Department of Energy for compliance with 
     the Federal energy conservation standards.
       ``(6) EF.--The term `EF' means the energy factor 
     established by the Department of Energy for compliance with 
     the Federal energy conservation standards.
       ``(7) Wf.--The term `WF' means Water Factor (as determined 
     by the Secretary of Energy).
       ``(8) Produced.--The term `produced' includes manufactured.
       ``(9) 2001 energy conservation standard.--The term `2001 
     energy conservation standard' means the energy conservation 
     standards promulgated by the Department of Energy and 
     effective July 1, 2001.
       ``(g) Special Rules.--For purposes of this section--
       ``(1) In general.--Rules similar to the rules of 
     subsections (c), (d), and (e) of section 52 shall apply.
       ``(2) Controlled group.--
       ``(A) In general.--All persons treated as a single employer 
     under subsection (a) or (b) of section 52 or subsection (m) 
     or (o) of section 414 shall be treated as a single producer.
       ``(B) Inclusion of foreign corporations.--For purposes of 
     subparagraph (A), in applying subsections (a) and (b) of 
     section 52 to this section, section 1563 shall be applied 
     without regard to subsection (b)(2)(C) thereof.
       ``(3) Verification.--No amount shall be allowed as a credit 
     under subsection (a) with respect to which the taxpayer has 
     not submitted such information or certification as the 
     Secretary, in consultation with the Secretary of Energy, 
     determines necessary.''.
       (b) Conforming Amendment.--Section 38(b) of the Internal 
     Revenue Code of 1986 (relating to general business credit) is 
     amended by striking ``plus'' at the end of paragraph (18), by 
     striking the period at the end of paragraph (19) and 
     inserting ``, plus'', and by adding at the end the following 
     new paragraph:
       ``(20) the energy efficient appliance credit determined 
     under section 45J(a).''.
       (c) Clerical Amendment.--The table of sections for subpart 
     D of part IV of subchapter A of chapter 1 of the Internal 
     Revenue Code of 1986 is amended by adding at the end the 
     following new item:

``Sec. 45J. Energy efficient appliance credit''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to appliances produced after the date of the 
     enactment of this Act, in taxable years ending after such 
     date.
                                 ______
                                 
      By Mr. DODD (for himself, Ms. Snowe, Mr. Durbin, and Mr. Burns):
  S. 1023. A bill to provide for the establishment of a Digital 
Opportunity Investment Trust; to the Committee on Health, Education, 
Labor, and Pensions.
  Mr. DODD. Mr. President, I ask unanimous consent that the text of the 
bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1023

       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 ``Digital Opportunity 
     Investment Trust Act''.

     SEC. 2. ORGANIZATION.

       (a) In General.--There is established a nonprofit 
     corporation to be known as the ``Digital Opportunity 
     Investment Trust'' (referred to in this Act as the ``Trust'') 
     which

[[Page 9598]]

     shall not be an agency or establishment of the United States 
     Government. The Trust shall be subject to the provisions of 
     this section, and, to the extent consistent with this 
     section, to the District of Columbia Nonprofit Corporation 
     Act (D.C. Code, section 29-501 et seq.).
       (b) Funding.--
       (1) In general.--There is established in the Treasury a 
     separate fund to be known as the ``Digital Opportunity 
     Investment Trust Fund'' (referred to in this Act as the 
     ``Trust Fund''). The Trust Fund shall contain such amounts as 
     are transferred to the Trust Fund under paragraph (2) and any 
     interest earned on the investment of amounts in the Trust 
     Fund under section 4.
       (2) Transfer of funds.--The Secretary of the Treasury shall 
     in each fiscal quarter through the last quarter of fiscal 
     year 2028, transfer from the General Fund of the Treasury to 
     the Trust Fund, an amount equal to 30 percent of the proceeds 
     received by the Federal Government during the preceding 
     fiscal quarter from any use (including any auction, sale, fee 
     derived from, or other revenue generated from) of the 
     electromagnetic spectrum conducted under section 309 (or any 
     other section) of the Communications Act of 1934 (47 U.S.C. 
     309 (j)) (or any other provision of Federal law) after 
     September 30, 2007.
       (c) Board of Directors; Functions, and Duties.--
       (1) Board.--
       (A) In general.--A board of directors of the Trust 
     (referred to in this Act as the ``Board'') shall be 
     established to oversee the administration of the Trust. Such 
     Board shall consist of 9 members to be appointed by the 
     President, by and with the advice and consent of the Senate, 
     who--
       (i) reflect representation from the public and private 
     sectors;
       (ii) are not regular full-time employees of the Federal 
     Government;
       (iii) are eminent in such fields as telecommunications 
     including public television, information technology, labor 
     and workforce development, education, cultural and civic 
     affairs, or the arts and humanities;
       (iv) shall provide, as nearly as practicable, a broad 
     representation of various regions of the United States, 
     various professions and occupations, and various kinds of 
     talent and experience appropriate to the functions and 
     responsibilities of the Trust; and
       (v) shall be responsible for establishing the priorities 
     and funding obligations of the Trust.
       (B) Initial members.--The initial members of the Board 
     shall serve as incorporators of the Trust and shall take 
     whatever actions are necessary to establish the Trust under 
     the District of Columbia Nonprofit Corporation Act (D.C. 
     Code, section 29-501 et seq.).
       (C) Recommendations.--The Majority Leader of the Senate, 
     the Minority Leader of the Senate, the Speaker of the House 
     of Representatives, and the Minority Leader of the House of 
     Representatives shall jointly submit to the President 
     recommendations of individuals, selected from nominations 
     submitted to Congress from associations representing the 
     fields of science and learning relative to the work of the 
     Board, to serve as members of the Board.
       (D) Terms of appointment.--
       (i) Date.--Members of the Board shall be appointed not 
     later than 90 days after the date of enactment of this Act.
       (ii) Terms.--

       (I) In general.--Except as provided in subclause (II), each 
     member of the Board shall be appointed for a 6-year term with 
     terms set to expire in non-Federal election years.
       (II) Staggered terms.--With respect to the initial members 
     of the Board--

       (aa) 3 members shall serve for a term of 6 years;
       (bb) 3 members shall serve for a term of 4 years; and
       (cc) 3 members shall serve for a term of 2 years.
       (iii) Vacancies.--A vacancy in the membership of the Board 
     shall not affect the Board's powers, and shall be filled in 
     the same manner as the original member was appointed.
       (E) Chair and vice-chair.--
       (i) Selection.--The Board shall select, from among the 
     members of the Board, an individual to serve for a 2-year 
     term as Chair of the Board and an individual to serve for a 
     2-year term as vice-Chair of the Board.
       (ii) Consecutive terms.--An individual may not serve for 
     more than 2 consecutive terms as Chair of the Board.
       (F) Meetings.--
       (i) First meeting.--Not later than 30 days after the date 
     on which all of the members of the Board have been confirmed 
     by the Senate, the Chair of the Board shall call the first 
     meeting of the Board.
       (ii) Quorum.--A majority of the members of the Board shall 
     constitute a quorum, but a lesser number of members may hold 
     hearings.
       (G) Board personnel matters.--
       (i) Compensation.--Members of the Board shall not receive 
     compensation, allowances, or benefits by reason of the 
     members' service on the Board.
       (ii) Travel expenses.--The members of the Board shall be 
     allowed travel expenses, including per diem in lieu of 
     subsistence, at rates authorized for employees of agencies 
     under subchapter I of chapter 57 of title 5, United States 
     Code, while away from their homes or regular places of 
     business in the performance of services for the Board.
       (H) Solicitation of advice.--The Board from time to time 
     may solicit advice from--
       (i) the Secretary of Health and Human Services;
       (ii) the Secretary of Commerce;
       (iii) the Secretary of Education;
       (iv) the Secretary of Agriculture;
       (v) the Secretary of Defense;
       (vi) the Secretary of Energy;
       (vii) the Secretary of Homeland Security;
       (viii) the Secretary of the Interior;
       (ix) the Secretary of Labor;
       (x) the Administrator of the National Aeronautics and Space 
     Administration;
       (xi) the Director of the National Security Agency;
       (xii) the Director of the National Science Foundation;
       (xiii) the Director of the Office of Science and Technology 
     Policy;
       (xiv) the Director of the National Endowment for the Arts;
       (xv) the Director of the National Endowment for the 
     Humanities;
       (xvi) the Director of the Institute of Museum and Library 
     Services;
       (xvii) the Librarian of Congress; and
       (xviii) the President and Chief Executive Officer of the 
     Corporation for Public Broadcasting.
       (2) Director.--A majority of the members of the Board shall 
     select a Director of the Trust who shall serve at the 
     discretion of the Board and shall be responsible for 
     instituting procedures to carry out the policies and 
     priorities established by the Board, and for hiring all 
     personnel of the Trust. The rate of compensation of the 
     Director and personnel shall be fixed by the Board.
       (d) Trust Fund Uses.--
       (1) Uses of funds.--To achieve the objectives of this Act, 
     the Director of the Trust, after consultation with the Board, 
     may use Trust funds--
       (A) to support the digitization of collections and other 
     significant holdings of the nation's universities, museums, 
     libraries, public television stations, and other cultural 
     institutions;
       (B) to support basic and applied research, including 
     demonstrations of innovative learning and assessment systems 
     as well as the components and tools needed to create them;
       (C) to use the research results developed under 
     subparagraph (B) to create prototype applications designed to 
     meet learning objectives in a variety of subject areas and 
     designed for learners with many different educational needs, 
     including--
       (i) strengthening instruction in reading, science, 
     mathematics, history, and the arts in elementary and 
     secondary schools, community colleges, and other colleges and 
     universities;
       (ii) providing the training needed for people now in the 
     workplace to advance in a constantly changing work 
     environment; and
       (iii) developing new applications for life-long learning in 
     non-traditional learning environments such as libraries, 
     museums, senior and community centers, and public television 
     and radio;
       (D) to conduct assessments of legal, regulatory, and other 
     issues that must be resolved to ensure rapid development and 
     use of advanced learning technologies; and
       (E) to coordinate and disseminate information about 
     initiatives throughout the Federal Government that focus on 
     uses of technology in education and learning.
       (2) Contracts and grants.--
       (A) In general.--In order to carry out the activities 
     described in paragraph (1), the Director of the Trust, with 
     the agreement of a majority of the members of the Board, may 
     award contracts and grants to nonprofit public institutions 
     (with or without private partners) and for-profit 
     organizations and individuals.
       (B) Public domain.--
       (i) In general.--The research and development properties 
     and materials associated with a project in which a majority 
     of the funding used to carry out the project is from a grant 
     or contract under this Act shall be freely and nonexclusively 
     available to the general public.
       (ii) Exemption.--The Director of the Trust may exempt 
     specific projects from the requirement of clause (i) if the 
     Director of the Trust and a majority of the members of the 
     Board determine that the general public will benefit 
     significantly in the long run due to the project not being 
     freely and nonexclusively available to the general public.
       (C) Evaluation of proposals.--To the extent practicable, 
     proposals for such contracts or grants shall be evaluated on 
     the basis of comparative merit by panels of experts who 
     represent diverse interests and perspectives, and who are 
     appointed by the Director of the Trust from recommendations 
     from the fields served and the Board of Directors.
       (3) Cooperation.--The Director of the Trust, after 
     consultation with the Board, may cooperate with business, 
     industry, philanthropy, noncommercial education broadcast, 
     television and radio licensees and permittees, and local and 
     national public service institutions, including in activities 
     that seek to enhance the work of such public

[[Page 9599]]

     service institutions by seeking new ways to put 
     telecommunications and information technologies to work in 
     their areas of interest.

     SEC. 3. ACCOUNTABILITY AND REPORTING.

       (a) Report.--
       (1) In general.--Not later than April 30 of each year, the 
     Director of the Trust shall prepare a report for the 
     preceding fiscal year that contains the information described 
     in paragraph (2).
       (2) Contents.--A report under paragraph (1) shall include--
       (A) a comprehensive and detailed report of the Trust's 
     operations, activities, financial condition, and 
     accomplishments, and such recommendations as the Director of 
     the Trust determines appropriate; and
       (B) a comprehensive and detailed inventory of funds 
     distributed from the Trust Fund during the fiscal year for 
     which the report is being prepared.
       (3) Statement of the board.--Each report under paragraph 
     (1) shall include a statement from the Board containing--
       (A) a clear description of the plans and priorities of the 
     Board for the subsequent 5-year period for expenditures from 
     the Trust Fund; and
       (B) an estimate of the funds that will be available for 
     such expenditures from the Trust Fund.
       (4) Submission to the president and congress.--A report 
     under this subsection shall be submitted to the President and 
     the appropriate committees of Congress.
       (b) Testimony.--The Chair of the Board, other members of 
     the Board, and the Director and principal officers of the 
     Trust shall testify before the appropriate committees of 
     Congress, upon request of such committees, with respect to--
       (1) a report prepared under subsection (a)(1); and
       (2) any other matter that such committees may determine 
     appropriate.

     SEC. 4. INVESTMENT OF TRUST FUNDS.

       (a) In General.--The Secretary of the Treasury, after 
     consultation with the Board, shall invest the funds of the 
     Trust Fund in interest-bearing obligations of the United 
     States or in obligations guaranteed as to both principal and 
     interest by the United States.
       (b) Expenditures.--
       (1) In general.--The Director of the Trust shall not 
     undertake grant or contract activities under this Act until 
     the Trust has received the interest or other proceeds from 
     the investment of the Trust Funds for not less than 1 year's 
     duration. Thereafter, upon Board approval of the annual 
     budget of the Trust, the Director of the Trust may commence 
     such grant or contract activities at the start of each fiscal 
     year.
       (2) Obligation of funds.--
       (A) In general.--Except as provided in subparagraph (B), in 
     awarding grants or contracts or making other expenditures 
     under this Act, the Director of the Trust shall not obligate 
     funds from the Trust that exceed the proceeds received from 
     the investment of the funds in the Trust Fund during the 
     preceding fiscal year.
       (B) Carry over.--Funds from the Trust Fund that are 
     available for obligation for a fiscal year that are not 
     obligated for such fiscal year shall remain available for 
     obligation for the succeeding fiscal year.

     SEC. 5. SPECIAL ACCOUNT FOR DISTRIBUTION TO PUBLIC TELEVISION 
                   STATIONS.

       (a) Reservation.--An amount equivalent to 21 percent of the 
     interest derived from the investment proceeds referred to in 
     section 2(b)(2) shall be reserved in a special account within 
     the Trust Fund for distribution on a regular basis to those 
     noncommercial educational television broadcast stations (as 
     defined in section 397(6) of the Communications Act of 1934 
     (47 U.S.C. 397(6)) that are qualified to receive grants from 
     the Corporation for Public Broadcasting pursuant to section 
     396(k)(6)(B) of such Act (47 U.S.C. 396(k)(6)(B)) and to the 
     Public Broadcasting Service in partnership with such 
     stations.
       (b) Responsibility for Distribution.--The Director of the 
     Trust shall--
       (1) through a special contract, designate the Corporation 
     for Public Broadcasting as the sole agent responsible for the 
     distribution of funds under this section; and
       (2) transfer the funds referred to in subsection (a) to the 
     Corporation for Public Broadcasting on a regular basis.
       (c) Grants.--In making the distribution referred to in 
     subsection (a), the Corporation for Public Broadcasting shall 
     utilize a competitive grant application process that is 
     governed by criteria that ensures that funds are directed to 
     the creation of locally delivered digital education and 
     learning services and ensures that a diversity of licensee 
     types and geographic service areas are adequately served. The 
     Corporation for Public Broadcasting shall develop such 
     criteria in consultation with public television licensees, 
     permitees, and representatives designated by their national 
     organizations.
                                 ______
                                 
      By Ms. LANDRIEU:
  S. 1026. A bill to ensure that offshore energy development on the 
outer Continental Shelf continues to serve the needs of the United 
States, to create opportunities for new development and the use of 
alternative resources, and for other purposes; to the Committee on 
Energy and Natural Resources.
  Ms. LANDRIEU. Mr. President, today I rise to introduce legislation, 
The Stewardship for our Coasts and Opportunities for Reliable Energy 
Act--SCORE Act--which will ensure that offshore energy development on 
the Outer Continental Shelf--OCS--continues to serve our nation's 
needs, create opportunities for new development on the OCS as well as 
the use of alternative resources such as renewable energy.
  Since the energy frontier of the OCS was officially opened to 
significant oil and gas exploration in 1953, no single region has 
contributed nearly as much to our Nation's energy production. Today, 
the OCS represents more than 25 percent of our Nation's natural gas 
production and more than 30 percent of our domestic oil production and 
it is estimated that 60 percent of the oil and natural gas still to be 
discovered in U.S. will come from the OCS.
  An average of more than $5 billion in revenues from oil and gas 
production are returned to the federal treasury each year from the 
OCS--$145 billion since production began. That is the second biggest 
contributor of revenue to the Federal Treasury after income taxes.
  But just as the Western frontier once represented a great unknown to 
our Nation's policymakers, the impact and reality of the OCS seems lost 
in a time warp. While much of the OCS has been off limits for decades, 
technological advancements have developed in that time to better target 
the resources and dramatically reduce the environmental footprint. 
These innovations will continue to allow crucial exploration and 
production to take place but in an environmentally responsible way. For 
example, we have produced three times as many resources on the OCS as 
we thought existed 30 years ago.
  In fact, the Minerals Management Service--MMS--estimates that from 
1985 to 2001, OCS offshore facilities and pipelines accounted for only 
2 percent of the oil released into U.S. waters. In fact, 97 percent of 
OCS spills are one barrel or less in volume. Serving America's energy 
needs and being good stewards of the environment need not be mutually 
exclusive goals.
  However, despite our technological prowess and responsible 
exploration, we have yet to fully realize the potential the OCS has to 
offer. Today only 2.5 percent of the 1.76 billion acres that make up 
the OCS are leased. Most of the Pacific Coast and the eastern Gulf of 
Mexico are off limits as is the entire Atlantic seaboard.
  Almost all of the area on the OCS that is currently leased is in the 
Central and Western Gulf of Mexico, off the coasts of Louisiana and 
Texas, where 98 percent of total OCS production occurs. However, we 
cannot continue to take without giving something back in return. A 
significant portion of OCS revenues must be returned to the coastal 
producing states off whose coasts they are generated.
  The Mineral Leasing Act of 1920 shares automatically with states 50 
percent of revenues from mineral production on Federal lands within 
that State's boundaries. These funds are distributed to States 
automatically, outside the budget process and not subject to 
appropriations. In fiscal year 2004, the State of Wyoming received $564 
million as a result of this law and the State of New Mexico received 
$365 million. However, there is no similar provision in law for coastal 
producing states to share federal oil and gas revenues generated on the 
OCS.
  For both onshore and offshore production, the justification for 
sharing with the state is the same: the state serves as the platform 
which enables the Federal Government to support a basic element of our 
daily lives--turning on our lights, heating our homes and running our 
commuter trains. In light of the OCS' vital contribution to our 
Nation's energy needs, economy and national security, it seems only 
fair and logical that we should return a portion of these revenues to 
the few states that are providing this crucial supply of energy.
  The SCORE Act would automatically distribute a significant portion of 
OCS

[[Page 9600]]

revenues to the five coastal producing States without moratoria off 
their coasts Alaska, Texas, Louisiana, Mississippi and Alabama based on 
each state's production, with 35 percent of each State's allocation 
directed to coastal counties and parishes.
  When Hurricane Ivan struck back in September of last year, it should 
have been a wake up call to us all. Although the storm did not hit 
Louisiana directly, its impact on the price and supply of oil and gas 
in this country could still be felt four months later. One can only 
imagine what the impact would have been had Ivan cut a more Western 
path in the Gulf. How many more hurricane seasons are we going to spend 
playing Russian roulette with our oil and gas supply?
  Returning a portion of OCS revenues to coastal producing states is 
crucial to restoring and preserving the vital wetlands and the billions 
in energy investments they protect. It will also help further 
strengthen our national economic security by maintaining our current 
energy supply and continuing to provide the platform for us to go 
further in our quest to develop domestic resources while attempting to 
reduce our reliance on foreign energy supplies.
  In addition to ensuring that the vital offshore energy development 
that has served our Nation's needs for 50 years can continue, the SCORE 
Act also seeks to establish opportunities for new development on the 
OCS.
  The legislation would direct the Secretary of Interior to establish 
seaward lateral boundaries for all coastal States by regulation. 
Coastal States with a moratoria currently in place off their coasts 
would have the option, through their Governor with the consent of the 
State legislature, to explore the possibility of offshore energy 
development off their coasts.
  These coastal States could petition the Secretary of Interior for a 
resource assessment of energy sources located within their seaward 
lateral boundaries. With these assessments in hand, the State 
legislature of the State could request that any or all of the area 
within their boundaries, but only beyond 20 miles from their coastline, 
be made available for leasing. If the Secretary permits leasing within 
the requesting State's boundary, the State qualifies to receive a 
portion of revenues generated from any production that takes place 
within their seaward lateral boundary.
  Finally, SCORE would provide the opportunity for innovative, 
alternative uses of the OCS, including renewable energy projects such 
as wind, wave and solar. A portion of revenues from this production 
would be shared with the State off whose coastline the production took 
place.
  Next week the Senate Energy and Natural Resources Committee, under 
the leadership of Chairman Domenici and Senator Bingaman, will begin 
marking up comprehensive energy legislation. I am hopeful that some 
aspects of the proposal I have laid out today will be included as part 
of the bill reported out of committee. I look forward to working with 
my colleagues on the Committee over the next few weeks to further 
discuss these concepts and make them a reality.
  Quite simply, SCORE allows our country to continue to utilize the 
tremendous and vital natural resources of the OCS while also providing 
us the opportunity to further explore the unlimited potential of this 
vast frontier. It is time to base our decisions on modern successes 
rather than out-dated worries.
                                 ______
                                 
      By Mrs. CLINTON (for herself and Ms. Collins):
  S. 1028. A bill to amend title 10, United States Code, to enhance the 
protection of members of the Armed Forces and their spouses from 
unscrupulous financial services sales practices through increased 
consumer education, and for other purposes, to the Committee on Armed 
Services.
  Mrs. CLINTON. Mr. President, today I am introducing the Military 
Personnel Financial Services Education Act of 2005. Senator Collins, my 
colleague on the Armed Services Committee, has agreed to cosponsor this 
legislation. This bill will directly address a problem that has plagued 
military servicemen and women for years: a lack of general knowledge 
about the insurance and other financial services available to them. 
This deficiency in information has led to many of our brave men and 
women in uniform being taken advantage of by unscrupulous companies 
that have targeted and preyed on junior members of our military.
  Last year, a series of articles in the New York Times uncovered a 
serious problem: there were a number of companies using misleading 
sales practices to sell expensive life insurance policies to Iraq-bound 
recruits and other uniformed personnel. These articles led to 
investigations by the Department of Justice, reports by the GAO, and 
legislation by Congress. Earlier this year, I joined with Senator Enzi 
to introduce the Military Personnel Financial Services Protection Act. 
That legislation goes a long way toward tracking unscrupulous 
companies, and eliminating investment schemes which take advantage of 
our men and women in uniform.
  But we also need to address our more fundamental responsibilities to 
our servicemen and women, and their families, to ensure that we provide 
them with adequate financial education so that they can make informed 
decisions about their future.
  This bill will require the Department of Defense to provide consumer 
education for members of the armed forces and their spouses. It 
instructs the Secretary of Defense to carry out a comprehensive 
education program for military members regarding public and private 
financial services, including life insurance and the marketing 
practices of these services, available to them. This education will be 
institutionalized in the initial and recurring training for members of 
the military.
  This bill also requires that counseling services on these issues be 
made available, upon request, to members and their spouses. I think it 
is very important to include the spouses in this program, because we 
all know that investment decisions should be made as a family. Too many 
times, a military spouse has to make these decisions alone, while their 
husband or wife is deployed. This bill will require a permanent, 
trained counselor at military bases with at least 750 assigned 
personnel, and a part-time, equally capable counselor available at 
smaller bases with less than 750. By our calculations, this means about 
230 installations will have full-time counselors.
  Finally, regarding life insurance, this bill will take existing 
legislation and DoD policy one more step in the military member's 
favor. During counseling of members or spouses regarding life 
insurance, counselors must include information on the availability of 
Servicemembers' Group Life Insurance--SGLI--as well as other available 
products. It requires that any enlisted member in the grades of E1-E4 
must provide confirmation that they have received counseling from their 
approved counselor or commander before entering into any new contract 
with a private sector life insurer. Our legislation will keep the 
current rule of a 7 day waiting period for allotments to take effect to 
facilitate time for counseling. Existing policies will not be impacted 
by our legislation.
  I am pleased to be working on this issue with Senator Collins, my 
colleague on the Armed Services Committee, who has taken such a strong 
interest in ensuring proper financial education for our servicemembers.
  In closing, I want to reiterate the importance of this bill to 
military families. If implemented, this legislation will ensure our 
military families are fully equipped to make informed decisions that 
will best meet their financial and insurance needs. In my view, this is 
a provision long overdue. Thank you.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1028

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

[[Page 9601]]



     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Military Personnel Financial 
     Services Education Act of 2005''.

     SEC. 2. CONSUMER EDUCATION FOR MEMBERS OF THE ARMED FORCES 
                   AND THEIR SPOUSES ON INSURANCE AND OTHER 
                   FINANCIAL SERVICES.

       (a) Education and Counseling Requirements.--
       (1) In general.--Chapter 50 of title 10, United States 
     Code, is amended by adding at the end the following new 
     section:

     ``Sec. 992. Consumer education: financial services

       ``(a) Requirement for Consumer Education Program for 
     Members.--(1) The Secretary concerned shall carry out a 
     program to provide comprehensive education to members of the 
     armed forces under the jurisdiction of the Secretary on--
       ``(A) financial services that are available under law to 
     members;
       ``(B) financial services that are routinely offered by 
     private sector sources to members;
       ``(C) practices relating to the marketing of private sector 
     financial services to members;
       ``(D) such other matters relating to financial services 
     available to members, and the marketing of financial services 
     to members, as the Secretary considers appropriate; and
       ``(E) such other financial practices as the Secretary 
     considers appropriate.
       ``(2) Training under this subsection shall be provided to 
     members as--
       ``(A) a component of the members' initial entry training;
       ``(B) a component of each level of the members' 
     professional development training that is required for 
     promotion; and
       ``(C) a component of periodically recurring required 
     training that is provided for the members at military 
     installations.
       ``(3) The training provided at a military installation 
     under paragraph (2)(C) shall include information on any 
     financial services marketing practices that are particularly 
     prevalent at that military installation and in the vicinity.
       ``(b) Counseling for Members and Spouses.--(1) The 
     Secretary concerned shall provide counseling on financial 
     services to each member of the armed forces under the 
     jurisdiction of the Secretary.
       ``(2) The Secretary concerned shall, upon request, provide 
     counseling on financial services to the spouse of any member 
     of the armed forces under the jurisdiction of the Secretary.
       ``(2) The Secretary concerned shall provide counseling on 
     financial services under this subsection as follows:
       ``(A) In the case of members, and the spouses of members, 
     assigned to a military installation to which at least 750 
     members of the armed forces are assigned, through a full-time 
     financial services counselor at such installation.
       ``(B) In the case of members, and the spouses of members, 
     assigned to a military installation other than an 
     installation described in subparagraph (A), through such 
     mechanisms as the Secretary considers appropriate, including 
     through the provision of counseling by a member of the armed 
     forces in grade E-7 or above, or a civilian, at such 
     installation who provides such counseling as a part of the 
     other duties performed by such member or civilian, as the 
     case may be, at such installation.
       ``(3) Each financial services counselor under paragraph 
     (2)(A), and each individual providing counseling on financial 
     services under paragraph (2)(B), shall be an individual who, 
     by reason of education, training, or experience, is qualified 
     to provide helpful counseling to members of the armed forces 
     and their spouses on financial services and marketing 
     practices described in subsection (a)(1). Such individual may 
     be a member of the armed forces or an employee of the Federal 
     Government.
       ``(4) The Secretary concerned shall take such action as is 
     necessary to ensure that each financial services counselor 
     under paragraph (2)(A), and each individual providing 
     counseling on financial services under paragraph (2)(B), is 
     free from conflicts of interest relevant to the performance 
     of duty under this section and, in the performance of that 
     duty, is dedicated to furnishing members of the armed forces 
     and their spouses with helpful information and counseling on 
     financial services and related marketing practices.
       ``(5) The Secretary concerned may authorize financial 
     services counseling to be provided to members of a unit of 
     the armed forces by unit personnel under the guidance and 
     with the assistance of a financial services counselor under 
     paragraph (2)(A) or an individual providing counseling on 
     financial services under paragraph (2)(B), as applicable.
       ``(c) Life Insurance.--(1) In counseling a member of the 
     armed forces, or spouse of a member of the armed forces, 
     under this section regarding life insurance offered by a 
     private sector source, a financial services counselor under 
     subsection (b)(2)(A), or an individual providing counseling 
     on financial services under subsection (b)(2)(B), shall 
     furnish the member or spouse, as the case may be, with 
     information on the availability of Servicemembers' Group Life 
     Insurance under subchapter III of chapter 19 of title 38, 
     including information on the amounts of coverage available 
     and the procedures for electing coverage and the amount of 
     coverage.
       ``(2)(A) A covered member of the armed forces may not 
     authorize payment to be made for private sector life 
     insurance by means of an allotment of pay to which the member 
     is entitled under chapter 3 of title 37 unless the 
     authorization of allotment is accompanied by a written 
     certification by a commander of the member, or by a financial 
     services counselor referred to in subsection (b)(2)(A) or an 
     individual providing counseling on financial services under 
     subsection (b)(2)(B), as applicable, that the member has 
     received counseling under paragraph (1) regarding the 
     purchase of coverage under that private sector life 
     insurance.
       ``(B) Subject to subparagraph (C), a written certification 
     described in subparagraph (A) may not be made with respect to 
     a member's authorization of allotment as described in 
     subparagraph (A) until 7 days after the date of the member's 
     authorization of allotment in order to facilitate the 
     provision of counseling to the member under paragraph (1).
       ``(C) The commander of a member may waive the applicability 
     of subparagraph (B) to a member for good cause, including the 
     member's imminent change of station.
       ``(D) In this paragraph, the term `covered member of the 
     armed forces' means a member of the armed forces in grades E-
     1 through E-4.
       ``(d) Financial Services Defined.--In this section, the 
     term `financial services' includes the following:
       ``(1) Life insurance, casualty insurance, and other 
     insurance.
       ``(2) Investments in securities or financial 
     instruments.''.
       (2) Clerical amendment.--The table of sections at the 
     beginning of such chapter is amended by adding at the end the 
     following new item:

``992. Consumer education: financial services.''.

       (b) Continuing Effect of Existing Allotments for Life 
     Insurance.--Subsection (c)(2) of section 992 of title 10, 
     United States Code (as added by subsection (a)), shall not 
     affect any allotment of pay authorized by a member of the 
     Armed Forces before the effective date of such section.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the first day of the first month that 
     begins more than 120 days after the date of the enactment of 
     this Act.

  Ms. COLLINS. Mr. President, I am pleased to join with Senator Clinton 
on legislation that will address the persistent problems that we have 
experienced with the sale of inappropriate life insurance and 
investment products to our servicemen and women. Although these issues 
were newly publicized last year in a series of articles in the New York 
Times, these problems actually go back for decades according to a 2002 
Defense Department report.
  According to that report, deceptive practices have been employed to 
sell unnecessary and inappropriate financial products to our military 
for more than thirty years. Furthermore, these sales have been in 
violation of DoD's policies aimed at regulating the sale of commercial 
products on military bases.
  One of the report's most alarming findings is that these practices 
have a ``clear and present'' effect on morale, discipline and unit 
integrity. It states:

       Service members who have been coerced or deceived into 
     buying insurance on a military installation blame not only 
     the sales agents. The victims blame their military superiors 
     for placing them in a position to be misled. The trust and 
     respect that military leaders seek to instill in their 
     subordinates are clearly reduced among those who have bought 
     insurance that is of little or no value to them. This 
     adversely affects the unit integrity.

  The author of this study, an Army General and lawyer, spoke to 
numerous victims of these deceptive sales practices. He stated in his 
report that these soldiers told him that they had less trust in their 
military superiors after these incidents. They also expressed a reduced 
interest in reenlisting.
  With so many of our troops in harm's way, it is time for Congress to 
take decisive action on this matter. Although DoD has issued another 
set of draft regulations, it is barred by statute from implementing 
these reforms until this fall. Moreover, I am not convinced that merely 
tightening the regulation of such sales on base will have the desired 
outcome of significantly reducing the sale of inappropriate insurance 
products.
  The Clinton-Collins legislation would: establish a requirement that 
DoD provide real financial education for service members and their 
spouses; provide for financial counselors at

[[Page 9602]]

military bases; and require that junior enlisted personnel receive 
information on their federally provided life insurance before allotting 
part of their pay toward the purchase of private life insurance 
products.
  These provisions reflect the problems and deficiencies identified by 
DoD's own report. Specifically, the report concluded that DoD's current 
personal financial education programs were inadequate, noting 
particularly that the education provided enlisted personnel was 
``substantially less than that provided to junior officers.'' It is our 
belief that providing military personnel with a sound financial 
education and access to information is the best method of providing 
them and their families with the protection that they deserve.
  While that report went much further in its recommendations, even 
recommending that such sales be barred, our legislation provides for 
more moderate measures in the hope that we can make real progress on 
this matter without resorting to extreme measures that would unfairly 
punish the countless ethical insurance agents who responsibly serve the 
military life insurance market. Instead, our legislation would give our 
troops the tools to protect themselves against those who engage in 
these abusive and deceptive sales practices.
                                 ______
                                 
      By Mr. REED (for himself, Ms. Collins, Mr. Kennedy, and Mrs. 
        Murray):
  S. 1029. A bill to amend the Higher Education Act of 1965 to expand 
college access and increase college persistence, and for other 
purposes; to the Committee on Health, Education, Labor, and Pensions.
                                 ______
                                 
      By Mr. REED (for himself, Ms. Collins, Mr. Kennedy, and Mrs. 
        Murray):
  S. 1030. A bill to amend the Higher Education Act of 1965 to simplify 
and improve the process of applying for student assistance, and for 
other purposes; to the Committee on Health, Education, Labor, and 
Pensions.
  Mr. REED. Mr. President, today I introduce two bills to expand access 
to college. I am pleased to be joined in this effort by Senators 
Collins, Kennedy, and Murray.
  We are slated to reauthorize the Higher Education Act this Congress, 
after being unable to do so in the 108th Congress. Over the course of 
this time, the discussions on higher education have not focused on 
proposals that would help the neediest students attend college. This is 
troubling, particularly as more and more students are being priced out 
of college, which shortchanges their future and that of our Nation.
  An individual's climb up the economic ladder is directly related to 
the amount of education he or she receives. Given the strong 
correlation among educational attainment, employment, and wages, the 
cost of not going to college is just too high.
  And yet, too many college students are underprepared, underfinanced, 
and overworked. Those who make it through are saddled by huge loans. 
But as reports such as Empty Promises by the Advisory Committee on 
Student Financial Assistance have shown, many more cannot afford the 
cost of college at all.
  Even though there have been gains due to the Higher Education Act, 
the current approach to student aid is not working to close the gap in 
college attendance between our lowest and highest income students or 
the gap between the aid low-income students receive and the actual cost 
of attendance. Indeed, about seven times as many students from high-
income families graduate from college by age 24 as students from low-
income families. Low-income, college-qualified high school graduates 
have an annual ``unmet need'' of $4,000 and rising in college expenses.
  A decline in real dollars spent on grants and sharp increases in the 
cost of college have been key causal factors of this unfortunate 
situation. Indeed, there has been a steep decline in the purchasing 
power of the Pell Grant, which was established by my predecessor, 
Senator Claiborne Pell, to ensure higher education was not an 
``unachievable dream.'' According to the State PIRGs' Higher Education 
Project, the maximum Pell Grant covered 84 percent of average four-year 
public tuition costs in 1976. Today, the maximum Pell Grant of $4,050 
covers only about 39 percent.
  Over the last 10 years, tuition and fees at public and private 4-year 
colleges rose 51 percent and 36 percent, respectively, (after adjusting 
for inflation), which is a more rapid growth rate than consumer prices. 
Students have felt the bite as states have drastically cut funding for 
public colleges.
  In 2008, the largest number of students in our history will graduate 
from high school. Another demographic reality is that our nation will 
need to ensure a steady stream of replacement workers as college-
educated baby boomers begin to retire in increasing numbers.
  This crisis calls out for action. An educated citizenry and a world 
class workforce should be a national imperative. Our nation cannot 
afford to lose out on the countless returns from a robust education 
investment.
  Today we introduce two bills to expand college access.
  The first bill, the ACCESS--Accessing College through Comprehensive 
Early Outreach and State Partnerships--Act, focuses on a program I have 
long worked with Senator Collins and the other cosponsors to save, 
reinvigorate, and fund the Leveraging Educational Assistance 
Partnership or LEAP program. LEAP is the only program in which the 
federal and state governments are partners in extending higher 
education opportunities to financially needy students.
  The ACCESS Act forges a new Federal incentive for States to do even 
more to help low-income students by creating within LEAP an access and 
persistence partnership program. States will be rewarded--via higher 
levels of federal matching dollars--for creating vibrant partnerships 
with colleges, early intervention and mentoring programs, foundations, 
and businesses and providing cohesion and coordination among these 
entities. Access and persistence partnerships have three main goals: to 
provide low-income students with a grant that fills the gap of their 
unmet need; to increase participation of low-income students in early 
information, intervention, mentoring, and outreach programs; and to 
provide early notification to low-income students of their eligibility 
for financial aid. Research has shown that successful college access 
programs are those that offer early intervention and mentoring services 
coupled with early information about estimated financial aid awards and 
adequate grant funding to make the dream of higher education a reality. 
Students participating in such programs are more financially and 
academically prepared, and thus more likely to enroll in college and 
persist to degree completion.
  The second bill we introduce today, the FAFSA--Financial Aid Form 
Simplification and Access Act--has several key components designed to 
make the college application process both simple and certain. As the 
advisory committee's recent report, The Student Aid Gauntlet, has 
shown, students today confront an overly burdensome and complex 
financial aid application process. Our legislation would simplify this 
process by allowing more students to qualify for an Automatic-Zero--
auto-zero--Expected Family Contribution by aligning its eligibility 
with the standards of other federal means-tested programs, like free 
school lunch, SSI, and Food Stamps. Students and families should not 
have to prove over and over again that they are low-income, and asking 
students to fill out lengthy forms when they already meet the 
eligibility level for Pell Grants is a burden we should ease.
  In a similar vein, the legislation establishes a short, paper EZ-
FAFSA application form for students qualifying for the auto-zero; 
phases out the printing of the long paper form and utilizes the savings 
to bridge the digital divide for students without web access; requires 
the utilization of smart technology to create a tailored web-based 
application form that ensures students answer only the questions needed 
to determine financial aid eligibility in

[[Page 9603]]

the State in which they reside; and creates a free telefile system for 
students without Internet access. Additionally, the FAFSA Act requires 
the Secretary, in cooperation with states and colleges, to develop a 
system for students to get early estimates of aid from multiple 
sources, learn if they qualify to fill out an EZ FAFSA, and notify 
those participating in Federal means-tested programs of their potential 
eligibility for a maximum Pell Grant. Simplified forms and an early 
information system providing details on what filling out these forms 
means to students is critical, particularly given the American Council 
on Education's findings that one of every five dependent low-income 
students and one of every four independent low-income students failed 
to take advantage of financial aid programs because they did not submit 
a FAFSA.
  The FAFSA Act also expands college access for low-income students, in 
part by simplifying the application process for students with special 
circumstances, including students in foster care and emancipated youth; 
ensuring the equitable treatment of prepaid tuition and college savings 
plans; and reducing the work penalty. The current income protection 
allowance levels are unrealistically low, creating a disincentive for 
students to work in order to pay college costs.
  We must act on these bills and others to make sure that every student 
who works hard and plays by the rules gets the opportunity to live the 
American Dream.
  I was pleased to work with the Advisory Committee on Student 
Financial Assistance and a host of other higher education organizations 
and charitable foundations on these bills.
  I urge my colleagues to cosponsor these bills and work for their 
inclusion in the upcoming reauthorization of the Higher Education Act.
  Mr. President, I ask unanimous consent that the text of these bills 
be printed in the Record.
  There being no objection, the bills were ordered to be printed in the 
Record, as follows:

                                S. 1029

       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 ``Accessing College through 
     Comprehensive Early Outreach and State Partnerships Act''.

     SEC. 2. GRANTS FOR ACCESS AND PERSISTENCE.

       (a) Authorization of Appropriations.--Section 415A(b) of 
     the Higher Education Act of 1965 (20 U.S.C. 1070c(b)) is 
     amended by striking paragraphs (1) and (2) and inserting the 
     following:
       ``(1) In general.--There are authorized to be appropriated 
     to carry out this subpart $500,000,000 for fiscal year 2006, 
     and such sums as may be necessary for each of the 5 
     succeeding fiscal years.
       ``(2) Reservation.--For any fiscal year for which the 
     amount appropriated under paragraph (1) exceeds $30,000,000, 
     the excess amount shall be available to carry out section 
     415E.''.
       (b) Applications for Leveraging Educational Assistance 
     Partnership Programs.--Section 415C(b) of the Higher 
     Education Act of 1965 (20 U.S.C. 1070c-2(b)) is amended--
       (1) in paragraph (2), by striking ``$5,000'' and inserting 
     ``$12,500'';
       (2) in paragraph (9), by striking ``and'' after the 
     semicolon;
       (3) in paragraph (10), by striking the period at the end 
     and inserting ``; and''; and
       (4) by adding at the end the following:
       ``(11) provides notification to eligible students that such 
     grants are--
       ``(A) Leveraging Educational Assistance Partnership Grants; 
     and
       ``(B) funded by the Federal Government and the State.''.
       (c) Grants for Access and Persistence.--Section 415E of the 
     Higher Education Act of 1965 (20 U.S.C. 1070c-3a) is amended 
     to read as follows:

     ``SEC. 415E. GRANTS FOR ACCESS AND PERSISTENCE.

       ``(a) Purpose.--It is the purpose of this section to expand 
     college access and increase college persistence by making 
     allotments to States to enable the States to--
       ``(1) expand and enhance partnerships with institutions of 
     higher education, early information and intervention, 
     mentoring, or outreach programs, private corporations, 
     philanthropic organizations, and other interested parties to 
     carry out activities under this section and to provide 
     coordination and cohesion among Federal, State, and local 
     governmental and private efforts that provide financial 
     assistance to help low-income students attend college;
       ``(2) provide need-based access and persistence grants to 
     eligible low-income students;
       ``(3) provide early notification to low-income students of 
     their eligibility for financial aid; and
       ``(4) encourage increased participation in early 
     information and intervention, mentoring, or outreach 
     programs.
       ``(b) Allotments to States.--
       ``(1) In general.--
       ``(A) Authorization.--From sums reserved under section 
     415A(b)(2) for each fiscal year, the Secretary shall make an 
     allotment to each State that submits an application for an 
     allotment in accordance with subsection (c) to enable the 
     State to pay the Federal share of the cost of carrying out 
     the activities under subsection (d).
       ``(B) Determination of allotment.--In making allotments 
     under subparagraph (A), the Secretary shall consider the 
     following:
       ``(i) Continuation of award.--If a State continues to meet 
     the specifications established in its application under 
     subsection (c), the Secretary shall make an allotment to such 
     State that is not less than the allotment made to such State 
     for the previous fiscal year.
       ``(ii) Priority.--The Secretary shall give priority in 
     making allotments to States that meet the requirements under 
     paragraph (2)(B)(ii).
       ``(2) Federal share.--
       ``(A) In general.--The Federal share of the cost of 
     carrying out the activities under subsection (d) for any 
     fiscal year may not exceed 66.66 percent.
       ``(B) Different percentages.--The Federal share under this 
     section shall be determined in accordance with the following:
       ``(i) If a State applies for an allotment under this 
     section in partnership with any number of degree granting 
     institutions of higher education in the State whose combined 
     full-time enrollment represents less than a majority of all 
     students attending institutions of higher education in the 
     State, and philanthropic organizations that are located in, 
     or that provide funding in, the State or private corporations 
     that are located in, or that do business in, the State, then 
     the Federal share of the cost of carrying out the activities 
     under subsection (d) shall be equal to 57 percent.
       ``(ii) If a State applies for an allotment under this 
     section in partnership with any number of degree granting 
     institutions of higher education in the State whose combined 
     full-time enrollment represents a majority of all students 
     attending institutions of higher education in the State, 
     philanthropic organizations that are located in, or that 
     provide funding in, the State, and private corporations that 
     are located in, or that do business in, the State, then the 
     Federal share of the cost of carrying out the activities 
     under subsection (d) shall be equal to 66.66 percent.
       ``(c) Application for Allotment.--
       ``(1) In general.--
       ``(A) Submission.--A State that desires to receive an 
     allotment under this section shall submit an application to 
     the Secretary at such time, in such manner, and containing 
     such information as the Secretary may require.
       ``(B) Content.--An application submitted under subparagraph 
     (A) shall include the following:
       ``(i) A description of the State's plan for using the 
     allotted funds.
       ``(ii) Assurances that the State will provide matching 
     funds, from State, institutional, philanthropic, or private 
     funds, of not less than 33.33 percent of the cost of carrying 
     out the activities under subsection (d). Matching funds from 
     philanthropic organizations used to provide early information 
     and intervention, mentoring, or outreach programs may be in 
     cash or in kind. The State shall specify the methods by which 
     matching funds will be paid and include provisions designed 
     to ensure that funds provided under this section will be used 
     to supplement, and not supplant, Federal and non-Federal 
     funds available for carrying out the activities under this 
     title. A State that uses non-Federal funds to create or 
     expand existing partnerships with nonprofit organizations or 
     community-based organizations in which such organizations 
     match State funds for student scholarships, may apply such 
     matching funds from such organizations toward fulfilling the 
     State's matching obligation under this clause.
       ``(iii) Assurances that early information and intervention, 
     mentoring, or outreach programs exist within the State or 
     that there is a plan to make such programs widely available.
       ``(iv) A description of the organizational structure that 
     the State has in place to administer the activities under 
     subsection (d), including a description of the system the 
     State will use to track the participation of students who 
     receive grants under this section to degree completion.
       ``(v) Assurances that the State has a method in place, such 
     as acceptance of the automatic zero expected family 
     contribution determination described in section 479, to 
     identify eligible low-income students and award State grant 
     aid to such students.
       ``(vi) Assurances that the State will provide notification 
     to eligible low-income students that grants under this 
     section are--

       ``(I) Leveraging Educational Assistance Partnership Grants; 
     and

[[Page 9604]]

       ``(II) funded by the Federal Government and the State.

       ``(2) State agency.--The State agency that submits an 
     application for a State under section 415C(a) shall be the 
     same State agency that submits an application under paragraph 
     (1) for such State.
       ``(3) Partnership.--In applying for an allotment under this 
     section, the State agency shall apply for the allotment in 
     partnership with--
       ``(A) not less than 1 public and 1 private degree granting 
     institution of higher education that are located in the 
     State;
       ``(B) new or existing early information and intervention, 
     mentoring, or outreach programs located in the State; and
       ``(C) not less than 1--
       ``(i) philanthropic organization located in, or that 
     provides funding in, the State; or
       ``(ii) private corporation located in, or that does 
     business in, the State.
       ``(4) Roles of partners.--
       ``(A) State agency.--A State agency that is in a 
     partnership receiving an allotment under this section--
       ``(i) shall--

       ``(I) serve as the primary administrative unit for the 
     partnership;
       ``(II) provide or coordinate matching funds, and coordinate 
     activities among partners;
       ``(III) encourage each institution of higher education in 
     the State to participate in the partnership;
       ``(IV) make determinations and early notifications of 
     assistance as described under subsection (d)(2); and
       ``(V) annually report to the Secretary on the partnership's 
     progress in meeting the purpose of this section; and

       ``(ii) may provide early information and intervention, 
     mentoring, or outreach programs.
       ``(B) Degree granting institutions of higher education.--A 
     degree granting institution of higher education that is in a 
     partnership receiving an allotment under this section--
       ``(i) shall--

       ``(I) recruit and admit participating qualified students 
     and provide such additional institutional grant aid to 
     participating students as agreed to with the State agency;
       ``(II) provide support services to students who receive an 
     access and persistence grant under this section and are 
     enrolled at such institution; and
       ``(III) assist the State in the identification of eligible 
     students and the dissemination of early notifications of 
     assistance as agreed to with the State agency; and

       ``(ii) may provide funding for early information and 
     intervention, mentoring, or outreach programs or provide such 
     services directly.
       ``(C) Programs.--An early information and intervention, 
     mentoring, or outreach program that is in a partnership 
     receiving an allotment under this section shall provide 
     direct services, support, and information to participating 
     students.
       ``(D) Philanthropic organization or private corporation.--A 
     philanthropic organization or private corporation that is in 
     a partnership receiving an allotment under this section shall 
     provide funds for access and persistence grants for 
     participating students, or provide funds or support for early 
     information and intervention, mentoring, or outreach 
     programs.
       ``(d) Authorized Activities.--
       ``(1) In general.--
       ``(A) Establishment of partnership.--Each State receiving 
     an allotment under this section shall use the funds to 
     establish a partnership to award access and persistence 
     grants to eligible low-income students in order to increase 
     the amount of financial assistance such students receive 
     under this subpart for undergraduate education expenses.
       ``(B) Amount.--
       ``(i) Partnerships with institutions serving less than a 
     majority of students in the state.--

       ``(I) In general.--In the case where a State receiving an 
     allotment under this section is in a partnership described in 
     subsection (b)(2)(B)(i), the amount of an access and 
     persistence grant awarded by such State shall be not less 
     than the amount that is equal to the average undergraduate 
     tuition and mandatory fees at 4-year public institutions of 
     higher education in the State where the student resides (less 
     any other Federal or State sponsored grant amount, college 
     work study amount, and scholarship amount received by the 
     student) and such amount shall be used toward the cost of 
     attendance at an institution of higher education, located in 
     the State, that is a partner in the partnership.
       ``(II) Cost of attendance.--A State that has a program, 
     apart from the partnership under this section, of providing 
     eligible low-income students with grants that are equal to 
     the average undergraduate tuition and mandatory fees at 4-
     year public institutions of higher education in the State, 
     may increase the amount of access and persistence grants 
     awarded by such State up to an amount that is equal to the 
     average cost of attendance at 4-year public institutions of 
     higher education in the State (less any other Federal or 
     State sponsored grant amount, college work study amount, and 
     scholarship amount received by the student).

       ``(ii) Partnership with institutions serving the majority 
     of students in the state.--In the case where a State 
     receiving an allotment under this section is in a partnership 
     described in subsection (b)(2)(B)(ii), the amount of an 
     access and persistence grant awarded by such State shall be 
     not more than an amount that is equal to the average cost of 
     attendance at 4-year public institutions of higher education 
     in the State where the student resides (less any other 
     Federal or State sponsored grant amount, college work study 
     amount, and scholarship amount received by the student) and 
     such amount shall be used by the student to attend an 
     institution of higher education, located in the State, that 
     is a partner in the partnership.
       ``(2) Early notification.--
       ``(A) In general.--Each State receiving an allotment under 
     this section shall annually notify low-income students, such 
     as students who are eligible to receive a free lunch under 
     the school lunch program established under the Richard B. 
     Russell National School Lunch Act, in grade 7 through grade 
     12 in the State of their potential eligibility for student 
     financial assistance, including an access and persistence 
     grant, to attend an institution of higher education.
       ``(B) Content of notice.--The notification under 
     subparagraph (A)--
       ``(i) shall include--

       ``(I) information about early information and intervention, 
     mentoring, or outreach programs available to the student;
       ``(II) information that a student's candidacy for an access 
     and persistence grant is enhanced through participation in an 
     early information and intervention, mentoring, or outreach 
     program;
       ``(III) an explanation that student and family eligibility 
     and participation in other Federal means-tested programs may 
     indicate eligibility for an access and persistence grant and 
     other student aid programs;
       ``(IV) a nonbinding estimation of the total amount of 
     financial aid a low-income student with a similar income 
     level may expect to receive, including an estimation of the 
     amount of an access and persistence grant and an estimation 
     of the amount of grants, loans, and all other available types 
     of aid from the major Federal and State financial aid 
     programs;
       ``(V) an explanation that in order to be eligible for an 
     access and persistence grant, at a minimum, a student shall 
     meet the requirement under paragraph (3), graduate from 
     secondary school, and enroll at an institution of higher 
     education that is a partner in the partnership;
       ``(VI) information on any additional requirements (such as 
     a student pledge detailing student responsibilities) that the 
     State may impose for receipt of an access and persistence 
     grant under this section; and
       ``(VII) instructions on how to apply for an access and 
     persistence grant and an explanation that a student is 
     required to file a Free Application for Federal Student Aid 
     authorized under section 483(a) to be eligible for such grant 
     and assistance from other Federal and State financial aid 
     programs; and

       ``(ii) may include a disclaimer that access and persistence 
     grant awards are contingent upon--

       ``(I) a determination of the student's financial 
     eligibility at the time of the student's enrollment at an 
     institution of higher education that is a partner in the 
     partnership;
       ``(II) annual Federal and State appropriations; and
       ``(III) other aid received by the student at the time of 
     the student's enrollment at an institution of higher 
     education that is a partner in the partnership.

       ``(3) Eligibility.--In determining which students are 
     eligible to receive access and persistence grants, the State 
     shall ensure that each such student meets not less than 1 of 
     the following:
       ``(A) Meets not less than 2 of the following criteria, with 
     priority given to students meeting all of the following 
     criteria:
       ``(i) Has an expected family contribution equal to zero (as 
     described in section 479) or a comparable alternative based 
     upon the State's approved criteria in section 415C(b)(4).
       ``(ii) Has qualified for a free lunch, or at the State's 
     discretion a reduced price lunch, under the school lunch 
     program established under the Richard B. Russell National 
     School Lunch Act.
       ``(iii) Qualifies for the State's maximum undergraduate 
     award, as authorized under section 415C(b).
       ``(iv) Is participating in, or has participated in, a 
     Federal, State, institutional, or community early information 
     and intervention, mentoring, or outreach program, as 
     recognized by the State agency administering activities under 
     this section.
       ``(B) Is receiving, or has received, an access and 
     persistence grant under this section, in accordance with 
     paragraph (5).
       ``(4) Grant award.--Once a student, including those who 
     have received early notification under paragraph (2) from the 
     State, applies for admission to an institution that is a 
     partner in the partnership, files a Free Application for 
     Federal Student Aid and any related existing State form, and 
     is determined eligible by the State under paragraph (3), the 
     State shall--

[[Page 9605]]

       ``(A) issue the student a preliminary access and 
     persistence grant award certificate with tentative award 
     amounts; and
       ``(B) inform the student that payment of the access and 
     persistence grant award amounts is subject to certification 
     of enrollment and award eligibility by the institution of 
     higher education.
       ``(5) Duration of award.--An eligible student that receives 
     an access and persistence grant under this section shall 
     receive such grant award for each year of such student's 
     undergraduate education in which the student remains eligible 
     for assistance under this title, including pursuant to 
     section 484(c), and remains financially eligible as 
     determined by the State, except that the State may impose 
     reasonable time limits to baccalaureate degree completion.
       ``(e) Administrative Cost Allowance.--A State that receives 
     an allotment under this section may reserve not more than 3.5 
     percent of the funds made available annually through the 
     allotment for State administrative functions required to 
     carry out this section.
       ``(f) Statutory and Regulatory Relief for Institutions of 
     Higher Education.--The Secretary may grant, upon the request 
     of an institution of higher education that is in a 
     partnership described in subsection (b)(2)(B)(ii) and that 
     receives an allotment under this section, a waiver for such 
     institution from statutory or regulatory requirements that 
     inhibit the ability of the institution to successfully and 
     efficiently participate in the activities of the partnership.
       ``(g) Applicability Rule.--The provisions of this subpart 
     which are not inconsistent with this section shall apply to 
     the program authorized by this section.
       ``(h) Maintenance of Effort Requirement.--Each State 
     receiving an allotment under this section for a fiscal year 
     shall provide the Secretary an assurance that the aggregate 
     amount expended per student or the aggregate expenditures by 
     the State, from funds derived from non-Federal sources, for 
     the authorized activities described in subsection (d) for the 
     preceding fiscal year were not less than the amount expended 
     per student or the aggregate expenditure by the State for the 
     activities for the second preceding fiscal year.
       ``(i) Special Rule.--Notwithstanding subsection (h), for 
     purposes of determining a State's share of the cost of the 
     authorized activities described in subsection (d), the State 
     shall consider only those expenditures from non-Federal 
     sources that exceed its total expenditures for need-based 
     grants, scholarships, and work-study assistance for fiscal 
     year 1999 (including any such assistance provided under this 
     subpart).
       ``(j) Reports.--Not later than 3 years after the date of 
     enactment of the Accessing College through Comprehensive 
     Early Outreach and State Partnerships Act, and annually 
     thereafter, the Secretary shall submit a report describing 
     the activities and the impact of the partnerships under this 
     section to the Committee on Health, Education, Labor, and 
     Pensions of the Senate and the Committee on Education and the 
     Workforce of the House of Representatives.''.
       (d) Continuation and Transition.--During the 2-year period 
     commencing on the date of enactment of this Act, the 
     Secretary shall continue to award grants under section 415E 
     of the Higher Education Act of 1965 (20 U.S.C. 1070c-3a), as 
     such section existed on the day before the date of enactment 
     of this Act, to States that choose to apply for grants under 
     such predecessor section.
       (e) Implementation and Evaluation.--Section 491(j) of the 
     Higher Education Act of 1965 (20 U.S.C. 1098(j)) is amended--
       (1) in paragraph (4), by striking ``and'' after the 
     semicolon; and
       (2) by striking paragraph (5) and inserting the following:
       ``(5) not later than 6 months after the date of enactment 
     of the Accessing College through Comprehensive Early Outreach 
     and State Partnerships Act, advise the Secretary on means to 
     implement the activities under section 415E, and the Advisory 
     Committee shall continue to monitor, evaluate, and make 
     recommendations on the progress of partnerships that receive 
     allotments under such section; and''.

                                S. 1030

       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 ``Financial Aid Form 
     Simplification and Access Act''.

     SEC. 2. SIMPLIFIED NEEDS TEST AND AUTOMATIC ZERO 
                   IMPROVEMENTS.

       (a) Simplified Needs Test.--Section 479 of the Higher 
     Education Act of 1965 (20 U.S.C. 1087ss) is amended--
       (1) in subsection (b)--
       (A) in paragraph (1)--
       (i) by striking subparagraph (A)(i) and inserting the 
     following:
       ``(i) the student's parents--

       ``(I) file, or are eligible to file, a form described in 
     paragraph (3);
       ``(II) certify that they are not required to file an income 
     tax return;
       ``(III) 1 of whom is a dislocated worker; or
       ``(IV) or the student received benefits at some time during 
     the previous 24-month period under a means-tested Federal 
     benefit program as defined under subsection (d); and''; and

       (ii) by striking subparagraph (B)(i) and inserting the 
     following:
       ``(i) the student (and the student's spouse, if any)--

       ``(I) files, or is eligible to file, a form described in 
     paragraph (3);
       ``(II) certifies that the student (and the student's 
     spouse, if any) is not required to file an income tax return;
       ``(III) is a dislocated worker; or
       ``(IV) received benefits at some time during the previous 
     24-month period under a means-tested Federal benefit program 
     as defined under subsection (d); and''; and

       (B) 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 family, files a form described in this subsection, or 
     subsection (c), as the case may be, if the student or family, 
     as appropriate, files'';
       (2) in subsection (c)--
       (A) in paragraph (1)--
       (i) by striking subparagraph (A) and inserting the 
     following:
       ``(A) the student's parents--
       ``(i) file, or are eligible to file, a form described in 
     subsection (b)(3);
       ``(ii) certify that they are not required to file an income 
     tax return;
       ``(iii) 1 of whom is a dislocated worker; or
       ``(iv) or the student received benefits at some time during 
     the previous 24-month period under a means-tested Federal 
     benefit program as defined under subsection (d); and''; and
       (ii) by striking subparagraph (B) and inserting the 
     following:
       ``(B) the sum of the adjusted gross income of the parents 
     is less than or equal to $25,000; or'';
       (B) in paragraph (2)--
       (i) by striking subparagraph (A) and inserting the 
     following:
       ``(A) the student (and the student's spouse, if any)--
       ``(i) files, or is eligible to file, a form described in 
     subsection (b)(3);
       ``(ii) certifies that the student (and the student's 
     spouse, if any) is not required to file an income tax return;
       ``(iii) is a dislocated worker; or
       ``(iv) received benefits at some time during the previous 
     24-month period under a means-tested Federal benefit program 
     as defined under subsection (d); and''; and
       (ii) by striking subparagraph (B) and inserting the 
     following:
       ``(B) the sum of the adjusted gross income of the student 
     and spouse (if appropriate) is less than or equal to 
     $25,000.''; and
       (C) by striking the flush matter at the end and inserting 
     the following:

     ``The Secretary shall annually adjust the income level 
     necessary to qualify an applicant for the zero expected 
     family contribution. The income level shall be adjusted 
     according to increases in the Consumer Price Index, as 
     defined in section 478(f).''; and
       (3) by adding at the end the following:
       ``(d) Definitions.--In this section:
       ``(1) Dislocated worker.--The term `dislocated worker' has 
     the same meaning given the term in section 101 of the 
     Workforce Investment Act of 1998 (29 U.S.C. 2801).
       ``(2) Means-tested federal benefit program.--The term 
     `means-tested Federal benefit program' means a mandatory 
     spending program of the Federal Government 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 includes the supplemental security income program under 
     title XVI of the Social Security Act (42 U.S.C. 1381 et 
     seq.), the food stamp program under the Food Stamp Act of 
     1977 (7 U.S.C. 2011 et seq.), and the free and reduced price 
     school lunch program established under the Richard B. Russell 
     National School Lunch Act (42 U.S.C. 1751 et seq.).''.
       (b) Discretion of Student Financial Aid Administrators.--
     Section 479A(a) of the Higher Education Act of 1965 (20 
     U.S.C. 1087tt(a)) is amended in the third sentence by 
     inserting ``a family member who is a dislocated worker (as 
     defined in section 101 of the Workforce Investment Act of 
     1998 (29 U.S.C. 2801)),'' after ``recent unemployment of a 
     family member,''.
       (c) Reporting Requirements.--
       (1) Eligibility guidelines.--The Secretary of Education 
     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 section 479 of the Higher 
     Education Act of 1965 (20 U.S.C. 1087ss(b)(1)(A)(i), 
     (b)(1)(B)(i), (c)(1)(A), and (c)(2)(A)).
       (2) Means-tested federal benefit program.--The Secretary 
     shall evaluate every 3 years the impact of including whether 
     a student or parent received benefits under a means-tested 
     Federal benefit program (as defined in section 479(d) of the 
     Higher Education Act of 1965 (20 U.S.C. 1087ss(d)) as a 
     factor in determining eligibility under subsections (b) and 
     (c) of section 479 of the Higher Education Act of 1965 (20 
     U.S.C. 1087ss(b) and (c)).

[[Page 9606]]



     SEC. 3 IMPROVING PAPER AND ELECTRONIC FORMS.

       (a) Simplified Needs Test.--Section 479(a) of the Higher 
     Education Act of 1965 (20 U.S.C. 1087ss(a)) is amended by 
     adding at the end the following:
       ``(3) Simplified forms.--The Secretary shall make special 
     efforts to notify families meeting the requirements of 
     subsection (c) that such families may use the EZ FAFSA 
     described in section 483(a)(2)(B) and notify families meeting 
     the requirements of subsection (b) that such families may use 
     the simplified electronic application form described in 
     section 483(a)(3)(B).''.
       (b) Common Financial Aid Form Development and Processing.--
     Section 483 of the Higher Education Act of 1965 (20 U.S.C. 
     1090) is amended--
       (1) in subsection (a)--
       (A) by striking paragraphs (1), (2), and (5);
       (B) by redesignating paragraphs (3), (4), (6), and (7), as 
     paragraphs (8), (9), (10), and (11), respectively;
       (C) by inserting before paragraph (8), as redesignated by 
     subparagraph (B), the following:
       ``(1) In general.--
       ``(A) Common financial reporting forms.--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 (except 
     as otherwise provided in this subsection) as the `Free 
     Application for Federal Student Aid' or `FAFSA'.
       ``(B) Early analysis.--The Secretary shall permit an 
     applicant to complete a form described in this subsection 
     prior to enrollment in order to obtain an estimate from the 
     Secretary of the applicant's expected family contribution, as 
     defined in section 473. Such applicant shall be permitted to 
     update information submitted on a form described in this 
     subsection completed prior to enrollment using the process 
     described in paragraph (4).
       ``(2) Paper format.--
       ``(A) In general.--Subject to subparagraph (C), 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 EZ FAFSA 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 EZ 
     FAFSA space for information that is required of an applicant 
     to be eligible for State financial assistance, as provided 
     under paragraph (5), except the Secretary shall not include a 
     State's data if that State does not permit its applicants for 
     State assistance to use the EZ FAFSA.
       ``(iv) Free availability and processing.--The provisions of 
     paragraph (6) shall apply to the EZ FAFSA, and the data 
     collected by means of the EZ FAFSA shall be available to 
     institutions of higher education, guaranty agencies, and 
     States in accordance with paragraph (8).
       ``(v) Testing.--The Secretary shall conduct appropriate 
     field testing on the EZ FAFSA.
       ``(C) Phasing out the paper form for students who do not 
     meet the requirements of the automatic zero expected family 
     contribution.--
       ``(i) In general.--The Secretary shall make all efforts to 
     encourage all applicants to utilize the electronic forms 
     described in paragraph (3).
       ``(ii) Phaseout of full paper fafsa.--Not later than 5 
     years after the date of enactment of the Financial Aid Form 
     Simplification and Access Act, to the extent practicable, the 
     Secretary shall phaseout the printing of the full paper Free 
     Application for Federal Student Aid described in subparagraph 
     (A) and used by applicants who do not meet the requirements 
     of the EZ FAFSA described in subparagraph (B).
       ``(iii) Availability of full paper fafsa.--

       ``(I) In general.--Prior to and after the phaseout 
     described in clause (ii), the Secretary shall maintain an 
     online printable version of the paper forms described in 
     subparagraphs (A) and (B).
       ``(II) Accessibility.--The online printable version 
     described in subclause (I) shall be made easily accessible 
     and downloadable to students on the same website used to 
     provide students with the electronic application forms 
     described in paragraph (3).
       ``(III) Submission of forms.--The Secretary shall enable, 
     to the extent practicable, students to submit a form 
     described in this clause that is downloaded and printed in 
     order to meet the filing requirements of this section and to 
     receive aid from programs established under this title.

       ``(iv) Use of savings to address the digital divide.--

       ``(I) In general.--The Secretary shall utilize savings 
     accrued by phasing out the full paper Free Application for 
     Federal Student Aid and moving more applicants to the 
     electronic forms, to improve access to the electronic forms 
     for applicants meeting the requirements of section 479(c).
       ``(II) Report.--The Secretary shall report annually to the 
     Committee on Health, Education, Labor, and Pensions of the 
     Senate and the Committee on Education and the Workforce of 
     the House of Representatives on steps taken to eliminate the 
     digital divide and on the phaseout of the full paper Free 
     Application for Federal Student Aid described in subparagraph 
     (A). The report shall specifically address the impact of the 
     digital divide on independent students, adults, and dependent 
     students, including students completing applications 
     described in this paragraph and paragraphs (3) and (4).

       ``(3) Electronic format.--
       ``(A) In general.--
       ``(i) Establishment.--The Secretary shall produce, 
     distribute, and process common financial reporting forms in 
     electronic format (such as through a website called `FAFSA on 
     the Web') to meet the requirements of paragraph (1). The 
     Secretary shall include an electronic version of the EZ FAFSA 
     form for applicants who meet the requirements of paragraph 
     (2)(B) and develop common electronic forms for applicants who 
     meet the requirements of subparagraph (B) and common 
     electronic forms for applicants who do not meet the 
     requirements of subparagraph (B).
       ``(ii) State data.--The Secretary shall include on the 
     common electronic forms described in clause (i) space for 
     information that is required of an applicant to be eligible 
     for State financial assistance, as provided under paragraph 
     (5). The Secretary may not require an applicant to complete 
     data required by any State other than the applicant's State 
     of residence.
       (iii) Streamlined format.--The Secretary shall use, to the 
     fullest extent practicable, all available technology to 
     ensure that a student answers only the minimum number of 
     questions necessary.
       ``(B) Simplified application.--
       ``(i) In general.--The Secretary shall develop and use a 
     simplified electronic application form to be used by 
     applicants meeting the requirements under section 479(b).
       ``(ii) Reduced data requirements.--The simplified 
     electronic application form 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(b).
       ``(iii) State data.--The Secretary shall include on the 
     simplified electronic application form space for information 
     that is required of an applicant to be eligible for State 
     financial assistance, as provided under paragraph (5), except 
     the Secretary shall not include a State's data if that State 
     does not permit its applicants for State assistance to use 
     the simplified electronic application form.
       ``(iv) Free availability and processing.--The provisions of 
     paragraph (6) shall apply to the simplified electronic 
     application form, and the data collected by means of the 
     simplified electronic application form shall be available to 
     institutions of higher education, guaranty agencies, and 
     States in accordance with paragraph (8).
       ``(v) Testing.--The Secretary shall conduct appropriate 
     field testing on the form developed under this subparagraph.
       ``(C) Rule of construction.--Nothing in this subsection 
     shall be construed to prohibit the use of the form developed 
     by the Secretary pursuant to this paragraph by an eligible 
     institution, eligible lender, guaranty agency, State grant 
     agency, private computer software providers, a consortium of 
     such entities, or such other entities as the Secretary may 
     designate.
       ``(D) 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 form. Data collected by such 
     electronic version of the form 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 form 
     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, except as may be 
     permitted under this title.
       ``(E) Signature.--Notwithstanding any other provision of 
     this Act, the Secretary may permit an electronic form to be 
     submitted without a signature, if a signature is subsequently 
     submitted by the applicant.

[[Page 9607]]

       ``(F) Personal identification numbers authorized.--The 
     Secretary is authorized to assign to applicants personal 
     identification numbers--
       ``(i) to enable the applicants to use such numbers in lieu 
     of a signature for purposes of completing a form under this 
     paragraph; and
       ``(ii) for any purpose determined by the Secretary to 
     enable the Secretary to carry out this title.
       ``(4) Reapplication.--
       ``(A) 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 in the next 
     succeeding academic year subsequent to the year in which such 
     applicant first applied for financial assistance under this 
     title.
       ``(B) Updated.--The Secretary shall determine, in 
     cooperation with States, institutions of higher education, 
     and agencies and organizations involved in student financial 
     assistance, the data elements that can be updated from the 
     previous academic year's application.
       ``(C) Rule of construction.--Nothing in this title shall be 
     construed as limiting the authority of the Secretary to 
     reduce the number of data elements required of reapplicants.
       ``(D) 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.
       ``(5) 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 need-based State aid. Such items shall be 
     selected in consultation with States to assist in the 
     awarding of State financial assistance in accordance with the 
     terms 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 States notify the Secretary that they no 
     longer require those data items for the distribution of State 
     need-based aid.
       ``(B) Annual review.--The Secretary shall conduct an annual 
     review process to determine which forms and data items the 
     States require to award need-based State aid and other 
     application requirements that the States may impose.
       ``(C) Federal register notice.--The Secretary shall publish 
     on an annual basis a notice in the Federal Register requiring 
     each State agency to inform the Secretary--
       ``(i) if the agency is unable to permit applicants to 
     utilize the forms described in paragraphs (2)(B) and (3)(B); 
     and
       ``(ii) of the State-specific data that the agency requires 
     for delivery of State need-based financial aid.
       ``(D) State notification to the secretary.--
       ``(i) In general.--Each State shall notify the Secretary--

       ``(I) whether the State permits an applicant to file a form 
     described in paragraph (2)(B) or (3)(B) for purposes of 
     determining eligibility for State need-based grant aid; and
       ``(II) of the State-specific data that the State requires 
     for delivery of State need-based financial aid.

       ``(ii) No permission.--In the event that a State does not 
     permit an applicant to file a form described in paragraph 
     (2)(B) or (3)(B) for purposes of determining eligibility for 
     State need-based grant aid--

       ``(I) the State shall notify the Secretary if it 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 the forms described in paragraphs (2)(B) and (3)(B).

       ``(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 the forms 
     described in paragraphs (2)(B) and (3)(B); and
       ``(II) not require any resident of that State to complete 
     any data previously required by that State.

       ``(E) Restriction.--The Secretary shall not require 
     applicants to complete any nonfinancial data or financial 
     data that are not required by the applicant's State agency, 
     except as may be required for applicants who use the paper 
     forms described in subparagraphs (A) and (B) of paragraph 
     (2).
       ``(6) Charges to students and parents for use of forms 
     prohibited.--The common financial reporting forms prescribed 
     by the Secretary under this subsection shall be produced, 
     distributed, and processed by the Secretary and no parent or 
     student shall be charged a fee by the Secretary, a 
     contractor, a third party servicer or private software 
     provider, or any other public or private entity for the 
     collection, processing, or delivery of financial aid through 
     the use of such forms. The need and eligibility of a student 
     for financial assistance under parts A through E (other than 
     under subpart 4 of part A) may only be determined by using a 
     form developed by the Secretary pursuant to this subsection. 
     No student may receive assistance under parts A through E 
     (other than under subpart 4 of part A), except by use of a 
     form developed by the Secretary pursuant to this subsection. 
     No data collected on a paper or electronic form or other 
     document, which the Secretary determines was created to 
     replace a form prescribed under this subsection and therefore 
     violates the integrity of a simplified and free financial aid 
     application process, for which a fee is charged shall be used 
     to complete the form prescribed under this subsection. No 
     person, commercial entity, or other entity shall request, 
     obtain, or utilize an applicant's Personal Identification 
     Number for purposes of submitting an application on an 
     applicant's behalf except State agencies that have entered 
     into an agreement with the Secretary to streamline 
     applications, eligible institutions, or programs under this 
     title as permitted by the Secretary.
       ``(7) Application processing cycle.--The Secretary shall, 
     prior to January 1 of a student's planned year of enrollment 
     to the extent practicable--
       ``(A) enable the student to submit a form described under 
     this subsection in order to meet the filing requirements of 
     this section and receive aid from programs under this title; 
     and
       ``(B) initiate the processing of a form under this 
     subsection submitted by the student.''; and
       (D) by adding at the end the following:
       ``(12) Early application and award demonstration program.--
       ``(A) In general.--Not later than 2 years after the date of 
     enactment of this paragraph, the Secretary shall implement an 
     early application demonstration program enabling dependent 
     students to--
       ``(i) complete applications under this subsection in such 
     students' junior year of secondary school, or in the academic 
     year that is 2 years prior to such students' intended year of 
     enrollment at an institution of higher education; and
       ``(ii) be eligible to receive aid under this title, aid 
     from participants under this paragraph, State financial 
     assistance as provided under section 415C, and other aid 
     provided by participating institutions through the submission 
     of an application as described in clause (i).
       ``(B) Purpose.--The purpose of the demonstration program 
     under this paragraph is to measure the benefits, in terms of 
     student aspirations and plans to attend college, and the 
     adverse effects, in terms of program costs, integrity, 
     distribution, and delivery of aid under this title, of 
     implementing an early application system for all dependent 
     students that allows dependent students to apply for 
     financial aid using information from the year prior to the 
     year prior to enrollment at an institution of higher 
     education. Additional objectives associated with 
     implementation of the demonstration program are the 
     following:
       ``(i) Measure the feasibility of enabling dependent 
     students to apply for Federal, State, and institutional 
     financial aid in such students' junior year of secondary 
     school, using information from the year prior to the year 
     prior to enrollment, by completing any of the application 
     forms under this subsection.
       ``(ii) Determine the feasibility, benefits, and adverse 
     effects of implementing a data match with the Internal 
     Revenue Service.
       ``(iii) Identify whether receiving final financial aid 
     awards not later than the fall of a student's senior year 
     positively impacts the college aspirations and plans of such 
     student.
       ``(iv) Measure the impact of using income information from 
     the year prior to the year prior to enrollment on--

       ``(I) eligibility for financial aid under this title and 
     for other institutional aid; and
       ``(II) the cost of financial aid programs under this title.

       ``(v) Effectively evaluate the benefits and adverse effects 
     of the demonstration program on program costs, integrity, 
     distribution, and delivery of aid.
       ``(C) Participants.--The Secretary shall select, in 
     consultation with States and institutions of higher 
     education, States and institutions within the States 
     interested in participating in the demonstration program 
     under this paragraph. The States and institutions of higher 
     education shall participate in programs under this title and 
     be willing to make final financial aid awards to students 
     based on such students' application information from the year 
     prior to the year prior to enrollment. Such awards may be 
     contingent on the student being admitted to and enrolling in 
     the participating institution the following year. The 
     Secretary shall also select as participants in the 
     demonstration program secondary schools that are located in 
     the participating States and dependent students who reside in 
     the participating States.
       ``(D) Application process.--The Secretary shall ensure that 
     the following provisions are included in the demonstration 
     program:
       ``(i) Participating States and institutions of higher 
     education shall--

       ``(I) allow participating students to apply for financial 
     aid as provided under this title during such students' junior 
     year of secondary school using information from the year 
     prior to the year prior to enrollment; and

[[Page 9608]]

       ``(II) award final financial aid awards to participating 
     students based on the applications provided under the 
     demonstration program.

       ``(ii) Participating States and institutions of higher 
     education shall not require students participating in the 
     demonstration program to complete an additional application 
     in the year prior to enrollment in order to receive State aid 
     under section 415C and any other institutional aid.
       ``(iii) Financial aid administrators at participating 
     institutions of higher education shall be allowed to use such 
     administrators' discretion in awarding financial aid to 
     participating students, as outlined under sections 479A and 
     480(d).
       ``(E) Data match with the internal revenue service.--The 
     Secretary shall include in the demonstration project a data 
     match with the Internal Revenue Service in order to verify 
     data provided by participating students and gauge the 
     feasibility of implementing such a data match for all 
     students applying for aid under this title.
       ``(F) Evaluation.--The Secretary shall conduct a rigorous 
     evaluation of the demonstration program in order to measure 
     the program's benefits and adverse effects as required under 
     subparagraph (B).
       ``(G) Outreach.--The Secretary shall make appropriate 
     efforts in order to notify States of the demonstration 
     program. Upon determination of which States will be 
     participating in the demonstration program, the Secretary 
     shall continue to make efforts to notify institutions of 
     higher education and dependent students within such 
     participating States of the opportunity to participate in the 
     demonstration program and of the participation requirements.
       ``(H) Consultation.--The Secretary shall consult with the 
     Advisory Committee on Student Financial Assistance, 
     established under section 491, on the design and 
     implementation of the demonstration program and on the 
     evaluation described in paragraph (F).'';
       (2) by striking subsection (b) and inserting the following:
       ``(b) Early Awareness of Aid Eligibility.--
       ``(1) In general.--The Secretary shall make every effort to 
     provide students with early information about potential 
     financial aid eligibility.
       ``(2) Availability of means to determine eligibility.--
       ``(A) In general.--The Secretary shall provide, in 
     cooperation with States, institutions of higher education, 
     agencies, and organizations involved in student financial 
     assistance, both through a widely disseminated printed form 
     and the Internet or other electronic means, a system for 
     individuals to determine easily, by entering relevant data, 
     approximately the amount of grant, work-study, and loan 
     assistance for which an individual would be eligible under 
     this title upon completion and verification of a form under 
     subsection (a).
       ``(B) Determination of whether to use simplified 
     application.--The system established under this paragraph 
     shall also permit an individual to determine whether or not 
     the individual may apply for aid using an EZ FAFSA described 
     in subsection (a)(2)(B) or a simplified electronic 
     application form described in subsection (a)(3)(B).
       ``(3) Availability of means to communicate eligibility.--
       ``(A) Lower-income students.--The Secretary shall--
       ``(i) make special efforts to notify students who qualify 
     for a free or reduced price lunch under the school lunch 
     program established under the Richard B. Russell National 
     School Lunch Act (42 U.S.C. 1751 et seq.), benefits under the 
     food stamp program under the Food Stamp Act of 1977 (7 U.S.C. 
     2011 et seq.), or benefits under such programs as the 
     Secretary shall determine, of such students' potential 
     eligibility for a maximum Federal Pell Grant under subpart 1 
     of part A; and
       ``(ii) disseminate informational materials regarding the 
     linkage between eligibility for means-tested Federal benefit 
     programs and eligibility for a Federal Pell Grant, as 
     determined necessary by the Secretary.
       ``(B) Middle school students.--The Secretary shall, in 
     cooperation with States, middle schools, programs under this 
     title that serve middle school students, and other 
     cooperating independent outreach programs, make special 
     efforts to notify middle school students of the availability 
     of financial assistance under this title and of the 
     approximate amounts of grant, work-study, and loan assistance 
     an individual would be eligible for under this title.
       ``(C) Secondary school students.--The Secretary shall, in 
     cooperation with States, secondary schools, programs under 
     this title that serve secondary school students, and 
     cooperating independent outreach programs, make special 
     efforts to notify students in their junior year of secondary 
     school the approximate amounts of grant, work-study, and loan 
     assistance an individual would be eligible for under this 
     title upon completion and verification of an application form 
     under subsection (a).'';
       (3) in subsection (c), by striking ``Labor and Human 
     Resources'' and inserting ``Health, Education, Labor, and 
     Pensions'';
       (4) by striking subsection (d);
       (5) by redesignating subsection (e) as subsection (d); and
       (6) by amending subsection (d), as redesignated by 
     paragraph (5), to read as follows:
       ``(d) Assistance in Preparation of Financial Aid 
     Application.--
       ``(1) Preparation authorized.--Nothing in this Act shall 
     limit an applicant from using a preparer for consultative or 
     preparation services for the completion of the common 
     financial reporting forms described in subsection (a).
       ``(2) Preparer identification.--Any common financial 
     reporting form required to be made under this title shall 
     include the name, signature, address or employer's address, 
     social security number or employer identification number, and 
     organizational affiliation of the preparer of such common 
     financial reporting form.
       ``(3) Special rule.--Nothing in this Act shall limit 
     preparers of common financial reporting forms required to be 
     made under this title from collecting source information, 
     including Internal Revenue Service tax forms, in providing 
     consultative and preparation services in completing the 
     forms.
       ``(4) Additional requirements.--A preparer that provides 
     consultative or preparation services pursuant to this 
     subsection shall--
       ``(A) clearly inform individuals upon initial contact 
     (including advertising in clear and conspicuous language on 
     the website of the preparer, including by providing a link 
     directly to the website described in subsection (a)(3), if 
     the preparer provides such services through a website) that 
     the common financial reporting forms that are required to 
     determine eligibility for financial assistance under parts A 
     through E (other than subpart 4 of part A) may be completed 
     for free via paper or electronic forms provided by the 
     Secretary;
       ``(B) refrain from producing or disseminating any form 
     other than the forms produced by the Secretary under 
     subsection (a); and
       ``(C) not charge any fee to any individual seeking such 
     services who meets the requirements under subsection (b) or 
     (c) of section 479.''.
       (c) Toll-Free Application and Information.--Section 479 of 
     the Higher Education Act of 1965 (20 U.S.C. 1087ss), as 
     amended by section 2, is further amended by adding at the end 
     the following:
       ``(e) Toll-Free Application and Information.--The Secretary 
     shall contract for, or establish, and publicize a toll-free 
     telephone service to provide an application mechanism and 
     timely and accurate information to the general public. The 
     information provided shall include specific instructions on 
     completing the application form for assistance under this 
     title. Such service shall also include a service accessible 
     by telecommunications devices for the deaf (TDD's) and shall, 
     in addition to the services provided for in the previous 
     sentence, refer such students to the national clearinghouse 
     on postsecondary education or another appropriate provider of 
     technical assistance and information on postsecondary 
     educational services, that is supported under section 663 of 
     the Individuals with Disabilities Education Act. Not later 
     than 2 years after the date of enactment of the Financial Aid 
     Form Simplification and Access Act, the Secretary shall test 
     and implement, to the extent practicable, a toll-free 
     telephone-based application system to permit applicants who 
     are eligible to utilize the EZ FAFSA described in section 
     483(a) over such system.''.
       (d) Master Calendar.--Section 482(a)(1)(B) of the Higher 
     Education Act of 1965 (20 U.S.C. 1089(a)(1)(B)) is amended to 
     read as follows:
       ``(B) by March 1: proposed modifications and updates 
     pursuant to sections 478, 479(c), and 483(a)(5) published in 
     the Federal Register;''.
       (e) Simplifying the Verification Process.--Section 484 of 
     the Higher Education Act of 1965 (20 U.S.C. 1091) is amended 
     by adding at the end the following:
       ``(s) Verification of Student Eligibility.--
       ``(1) Regulatory review.--The Secretary shall review all 
     regulations of the Department related to verifying the 
     information provided on a student's financial aid application 
     in order to simplify the verification process for students 
     and institutions.
       ``(2) Report.--Not later than 2 years after the date of 
     enactment of this subsection, the Secretary shall prepare and 
     submit a final report to the Committee on Health, Education, 
     Labor, and Pensions of the Senate and the Committee on 
     Education and the Workforce of the House of Representatives 
     on steps taken, to the extent practicable, to simplify the 
     verification process. The report shall specifically address 
     steps taken to--
       ``(A) reduce the burden of verification on students who are 
     selected for verification at multiple institutions;
       ``(B) reduce the number of data elements that are required 
     to be verified for applicants meeting the requirements of 
     subsection (b) or (c) of section 479, so that only those data 
     elements required to determine eligibility under subsection 
     (b) or (c) of section 479 are subject to verification;
       ``(C) reduce the burden and costs associated with 
     verification for institutions that are eligible to 
     participate in Federal student aid programs under this title; 
     and

[[Page 9609]]

       ``(D) increase the use of technology in the verification 
     process.''.

     SEC. 4. ALLOWANCE FOR STATE AND OTHER TAXES.

       Section 478(g) of the Higher Education Act of 1965 (20 
     U.S.C. 1087rr(g)) is amended to read as follows:
       ``(g) State and Other Tax Allowance.--
       ``(1) Hold harmless.--Notwithstanding any other provision 
     of law, the annual updates to the allowance for State and 
     other taxes in the tables used in the Federal Need Analysis 
     Methodology to determine a student's expected family 
     contribution for the award year 2005-2006 under part F of 
     title IV, published in the Federal Register on Thursday, 
     December 23, 2004 (69 Fed. Reg. 76926), shall not apply to a 
     student to the extent the updates will reduce the amount of 
     Federal student assistance for which the student is eligible.
       ``(2) Publication in the federal register.--For each award 
     year after award year 2005-2006, the Secretary shall publish 
     in the Federal Register a revised table of State and other 
     tax allowances for the purpose of sections 475(c)(2), 
     475(g)(3), 476(b)(2), and 477(b)(2). The Secretary shall 
     develop such revised table after review of the Department of 
     the Treasury's Statistics of Income file and determination of 
     the percentage of income that each State's taxes represent. 
     The Secretary shall phase-in the State and other tax 
     allowances from the revised table for an award year 
     proportionately over a period of time of not less than 2 
     years if a revised table was not published in the Federal 
     Register during the previous award year.
       ``(3) Agreement.--The Secretary is authorized to enter into 
     agreement with the Commissioner of the Internal Revenue 
     Service to develop the data required to revise the table of 
     State and other tax allowances for the purpose of sections 
     475(c)(2), 475(g)(3), 476(b)(2), and 477(b)(2).''.

     SEC. 5. SUPPORT FOR WORKING STUDENTS.

       (a) Dependent Students.--Section 475(g)(2)(D) of the Higher 
     Education Act of 1965 (20 U.S.C. 1087oo(g)(2)(D)) is amended 
     to read as follows:
       ``(D) $9,000;''.
       (b) Independent Students Without Dependents Other Than a 
     Spouse.--Section 476(b)(1)(A)(iv) of the Higher Education Act 
     of 1965 (20 U.S.C. 1087pp(b)(1)(A)(iv)) is amended to read as 
     follows:
       ``(iv) an income protection allowance of the following 
     amount (or a successor amount prescribed by the Secretary 
     under section 478)--

       ``(I) $10,000 for single or separated students;
       ``(II) $10,000 for married students where both are enrolled 
     pursuant to subsection (a)(2); and
       ``(III) $13,000 for married students where 1 is enrolled 
     pursuant to subsection (a)(2);''.

       (c) Independent Students With Dependents Other Than a 
     Spouse.--Section 477(b)(4) of the Higher Education Act of 
     1965 (20 U.S.C. 1087qq(b)(4)) is amended to read as follows:
       ``(4) Income protection allowance.--The income protection 
     allowance is determined by the following table (or a 
     successor table prescribed by the Secretary under section 
     478):
       

                                          ``Income Protection Allowance
----------------------------------------------------------------------------------------------------------------
                                                                        Number in College
                                    Family Size ----------------------------------------------------------------
                                                      1            2            3            4            5
----------------------------------------------------------------------------------------------------------------
                                         2         $17,580      $15,230
                                         3          20,940       17,610      $16,260
                                         4          24,950       22,600       20,270      $17,930
                                         5          28,740       26,390       24,060       21,720      $19,390
                                         6          32,950       30,610       28,280       25,940       23,610
----------------------------------------------------------------------------------------------------------------
    NOTE: For each additional family member, add $3,280.
    For each additional college student, subtract $2,330.''.

     SEC. 6. SIMPLIFICATION FOR STUDENTS WITH SPECIAL 
                   CIRCUMSTANCES.

       (a) Independent Student.--Section 480(d) of the Higher 
     Education Act of 1965 (20 U.S.C. 1087vv(d)) is amended to 
     read as follows:
       ``(d) Independent Student.--
       ``(1) Definition.--The term `independent', when used with 
     respect to a student, means any individual who--
       ``(A) is 24 years of age or older by December 31 of the 
     award year;
       ``(B) 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;
       ``(C) is an emancipated minor or is in legal guardianship 
     as determined by a court of competent jurisdiction in the 
     individual's State of legal residence;
       ``(D) is a veteran of the Armed Forces of the United States 
     (as defined in subsection (c)(1)) or is currently serving on 
     active duty in the Armed Forces;
       ``(E) is a graduate or professional student;
       ``(F) is a married individual;
       ``(G) has legal dependents other than a spouse; or
       ``(H) is a student for whom a financial aid administrator 
     makes a documented determination of independence by reason of 
     other unusual circumstances.
       ``(2) Simplifying the dependency override process.--Nothing 
     in this section shall prohibit a financial aid administrator 
     from making a determination of independence, as described in 
     paragraph (1)(H), based upon a determination of independence 
     previously made by another financial aid administrator in the 
     same application year.''.
       (b) Tailoring Electronic Applications for Students with 
     Special Circumstances.--Section 483(a) of the Higher 
     Education Act of 1965 (20 U.S.C. 1090(a)), as amended by 
     section 3, is further amended by adding at the end the 
     following:
       ``(13) Applications for students seeking a documented 
     determination of independence.--In the case of a dependent 
     student seeking a documented determination of independence by 
     a financial aid administrator, as described in section 
     480(d), nothing in this section shall prohibit the Secretary 
     from--
       ``(A) allowing such student to--
       ``(i) indicate the student's request for a documented 
     determination of independence on an electronic form developed 
     pursuant to this subsection; and
       ``(ii) submit such form for preliminary processing that 
     only contains those data elements required of independent 
     students, as defined in section 480(d);
       ``(B) collecting and processing on a preliminary basis data 
     provided by such a student using the electronic forms 
     developed pursuant to this subsection; and
       ``(C) distributing such data to institutions of higher 
     education, guaranty agencies, and States for the purposes of 
     processing loan applications and determining need and 
     eligibility for institutional and State financial aid awards 
     on a preliminary basis, pending a documented determination of 
     independence by a financial aid administrator.''.

     SEC. 7. TREATMENT OF PREPAYMENT AND SAVINGS PLANS UNDER 
                   STUDENT FINANCIAL AID NEEDS ANALYSIS.

       (a) Definition of Assets.--Section 480(f) of the Higher 
     Education Act of 1965 (20 U.S.C. 1087vv(f)) is amended--
       (1) in paragraph (1), by inserting ``qualified education 
     benefits, except as provided in subparagraph (2),'' after 
     ``tax shelters,'';
       (2) by redesignating paragraph (2) as paragraph (4); and
       (3) by inserting after paragraph (1) the following:
       ``(2) A qualified education benefit shall not be considered 
     an asset of a dependent student for purposes of section 475. 
     The value of a qualified education benefit for purposes of 
     determining the assets of parents or an independent student 
     shall be--
       ``(A) the refund value of any tuition credits or 
     certificates purchased under a qualified education benefit; 
     or
       ``(B) the current balance of any account that is 
     established as a qualified education benefit for the purpose 
     of meeting the qualified higher education expenses of the 
     designated beneficiary of the account.
       ``(3) In this subsection, the term `qualified education 
     benefit' means--
       ``(A) a qualified tuition program (as defined in section 
     529(b)(1) of the Internal Revenue Code of 1986) or another 
     prepaid tuition plan offered by a State; or
       ``(B) a Coverdell education savings account (as defined in 
     section 530(b)(1) of the Internal Revenue Code of 1986).''.
       (b) Definition of Other Financial Assistance.--Section 
     480(j) of the Higher Education Act of 1965 (20 U.S.C. 
     1087vv(j)) is amended--
       (1) in the heading, by striking ``; Tuition Prepayment 
     Plans'';
       (2) by striking paragraph (2);
       (3) in paragraph (3), by inserting ``, or a distribution 
     that is not includable in gross income under section 529 of 
     such Code, under another prepaid tuition plan offered by a 
     State, or under a Coverdell education savings account under 
     section 530 of such Code'' after ``1986''; and
       (4) by redesignating paragraph (3) as paragraph (2).
       (c) Total Income.--Section 480(a)(2) of the Higher 
     Education Act of 1965 (20 U.S.C. 1087vv(a)(2)) is amended to 
     read as follows:
       ``(2) No portion of any student financial assistance 
     received from any program by an individual, no portion of a 
     national service educational award or post-service benefit 
     received by an individual under title I of the National and 
     Community Service Act of 1990 (42 U.S.C. 12571 et seq.), no 
     portion of any tax

[[Page 9610]]

      credit taken under section 25A of the Internal Revenue Code 
     of 1986, and no distribution from any qualified education 
     benefit defined in subsection (f)(3) that is not subject to 
     Federal income tax, shall be included as income or assets in 
     the computation of expected family contribution for any 
     program funded in whole or in part under this Act.''.

     SEC. 8. ADVISORY COMMITTEE ON STUDENT FINANCIAL ASSISTANCE.

       Section 491 of the Higher Education Act of 1965 (20 U.S.C. 
     1098) is further amended--
       (1) in subsection (a)(2)--
       (A) in subparagraph (B), by striking ``and'' after the 
     semicolon;
       (B) in subparagraph (C), by striking the period at the end 
     and inserting a semicolon; and
       (C) by adding at the end the following:
       ``(D) to provide knowledge and understanding of early 
     intervention programs and make recommendations that will 
     result in early awareness by low- and moderate-income 
     students and families of their eligibility for assistance 
     under this title, and, to the extent practicable, their 
     eligibility for other forms of State and institutional need-
     based student assistance; and
       ``(E) to make recommendations that will expand and improve 
     partnerships among the Federal Government, States, 
     institutions, and private entities to increase the awareness 
     and total amount of need-based student assistance available 
     to low- and moderate-income students.'';
       (2) in subsection (d)--
       (A) in paragraph (6), by striking ``, but nothing in this 
     section shall authorize the committee to perform such 
     studies, surveys, or analyses'';
       (B) in paragraph (8), by striking ``and'' after the 
     semicolon;
       (C) by redesignating paragraph (9) as paragraph (10); and
       (D) by inserting after paragraph (8) the following:
       ``(9) monitor the adequacy of total need-based aid 
     available to low- and moderate-income students from all 
     sources, assess the implications for access and persistence, 
     and report those implications annually to Congress and the 
     Secretary; and'';
       (3) in subsection (j)--
       (A) in paragraph (4), by striking ``and'' after the 
     semicolon;
       (B) in paragraph (5), by striking the period at the end and 
     inserting ``; and''; and
       (C) by adding at the end the following:
       ``(6) monitor and assess implementation of improvements 
     called for under this title, make recommendations to the 
     Secretary that ensure the timely design, testing, and 
     implementation of the improvements, and report annually to 
     Congress and the Secretary on progress made toward 
     simplifying overall delivery, reducing data elements and 
     questions, incorporating the latest technology, aligning 
     Federal, State, and institutional eligibility, enhancing 
     partnerships, and improving early awareness of total student 
     aid eligibility for low- and moderate-income students and 
     families.''; and
       (4) in subsection (k), by striking ``2004'' and inserting 
     ``2011''.
                                 ______
                                 
      By Ms. CANTWELL (for herself, Mr. Jeffords, and Mrs. Clinton):
  S. 1031. A bill to enhance the reliability of the electric system; to 
the Committee on Energy and Natural Resources.
  Ms. CANTWELL. Mr. President, I rise today to reintroduce the Electric 
Reliability Act of 2005, which I am pleased to introduce with my 
colleagues, Senator Clinton and Senator Jeffords. This legislation 
would give the Federal Energy Regulatory Commission--FERC--authority to 
devise a system of mandatory and enforceable standards for the reliable 
operation of our Nation's electricity grid.
  Enactment of this bill is long overdue. The provisions of this bill 
have passed the United States Senate many times. They represent crucial 
steps forward in the effort to modernize our Nation's electricity grid 
and reform the rules by which it is operated. I believe this body can 
and must make necessary progress in upgrading our electricity grid.
  As surely my colleagues recall, in August of 2003 much of the 
Northeast and Midwest suffered a massive power outage, affecting 50 
million consumers from New York to Michigan. This blackout, the biggest 
in our Nation's history, has underscored the need for mandatory and 
enforceable reliability standards--as envisioned in the Electric 
Reliability Act of 2005. To date, the system has operated under a set 
of voluntary guidelines, with no concrete penalties for those that 
break the rules and jeopardize the reliable energy service that is the 
foundation of our Nation's economy.
  Following the August 2003 blackout in the NE, a joint report issued 
by the United States and Canada the following April recommended a 
number of policy changes on both sides of our shared border. The first 
recommendation in that report was to make reliability standards 
mandatory and enforceable with penalties for non-compliance. The 
Electric Reliability Security Act of 2005 does exactly that.
  While the August 2003 blackout was certainly a potent reminder, the 
call for reliability legislation dates back at least another 5 years. 
In 1997, both a Task Force established by the Clinton administration's 
Department of Energy and a blue ribbon panel formed by the North 
American Electric Reliability Council--NERC--determined that 
reliability rules for our Nation's electric system had to be made 
mandatory and enforceable.
  These conclusions resulted, in part, from an August 1996 blackout in 
the Western Interconnection, where the short-circuit of two overloaded 
transmission lines near Portland, OR, caused a sweeping outage that 
knocked out power for up to 16 hours in 10 States, including my home 
State of Washington. The blackout affected 7.5 million consumers from 
Idaho to California, resulting in the automatic shut-down of 15 large 
thermal nuclear generating plants in California and the Southwest--
compromising the West's energy supply for several days, even after 
power had mostly been restored to end-users.
  As outlined in Economic Impacts of Infrastructure Failures, a 1997 
report submitted to the President's Commission on Critical 
Infrastructure Protection, the blackout was estimated to exact between 
$1 billion and $4 billion in direct and indirect costs to utilities, 
industry and consumers. The report also detailed the risks the outage 
posed to public health and safety, including an exponential increase in 
traffic accidents, hospitals forced to rely on emergency back-up power 
generation, and the grounding of more than 2,000 airline passengers.
  While it took time to develop consensus, the Senate recognized the 
human and economic stakes associated with the reliable operation of the 
electricity grid. Stand-alone legislation very similar to what I have 
introduced today passed this body in June 2000, when this Chamber was 
under Republican control. And even as the majority has twice changed 
hands since then, the United States Senate has twice passed the very 
provisions included in the Electric Reliability Act of 2005 as part of 
comprehensive energy legislation.
  Today I am introducing the Electric Reliability Act of 2005 as I 
believe it is time for this body to take concrete steps towards 
ensuring the continued reliable operation of our electric grid. This 
legislation would mark a substantial achievement in the effort to 
upgrade the reliability of our Nation's grid and insulate our economy 
from the disastrous impacts of electricity outages.
  I ask my colleagues to support this bill.
                                 ______
                                 
      By Mrs. BOXER:
  S. 1032. A bill to improve seaport security; to the Committee on 
Commerce, Science, and Transportation.
  Mrs. BOXER. Mr. President, at the end of 2002, the Maritime 
Transportation Security Act became law.
  I was a member of the conference committee on that bill, and I think 
it was a good first step in improving security at our Nation's ports.
  It had many good provisions, such as the creation of national and 
regional maritime transportation/port security plans to be approved by 
the Coast Guard; better coordination of Federal State, local, and 
private enforcement agencies; and the establishment of a grant program 
for port authorities, waterfront facilities operators, and State and 
local agencies to provide security infrastructure improvements.
  The problem with the bill was that it had no guaranteed funding 
mechanism. As a result, we are underfunding port security. Since the 
passage of the Maritime Transportation Security Act, the Department of 
Homeland Security has awarded approximately $625 million in port 
security grants. This is not enough. The Coast Guard has estimated a 
need for $5.4 billion over 10

[[Page 9611]]

years for port facility upgrades, and $7.3 billion over 10 years for 
all port security. At the same time, the administration only requested 
$600 million for infrastructure protection in fiscal year 2006, and 
this meager figure does not even specify a dedicated portion for port 
security grants.
  With over 40 percent of the Nation's goods imported through 
California's ports, a terrorist attack at a California port would not 
only be tragic but would be devastating for our Nation's economy.
  So, today, I am reintroducing a bill to provide more funding to the 
ports. Specifically, it will create a Port Security Grant Program in 
the Department of Homeland Security; provide $800 million per year for 
5 years in grant funding; and--this is very important to California's 
ports--allow the Federal Government to help finance larger multi-year 
projects similar to what is done with many of our airports for aviation 
security.
  I hope that the Senate will act on this bill. Now is not the time to 
slow down or delay our efforts to increase and improve transportation 
security. The job is not done, and it must be done.
                                 ______
                                 
      By Mr. McCAIN (for himself, Mr. Kennedy, Mr. Brownback, Mr. 
        Lieberman, Mr. Graham, and Mr. Salazar):
  S. 1033. A bill to improve border security and immigration; to the 
Committee on the Judiciary.
  Mr. McCAIN. Mr. President, after more than 5 months of work, I am 
pleased to be joined by Senators Kennedy, Brownback, Lieberman, Graham, 
and Salazar in introducing the Secure America and Orderly Immigration 
Act. This bipartisan, comprehensive immigration reform legislation is 
designed to fix our Nation's broken immigration system. This landmark 
legislation would bring common sense to the current system and promote 
our national security interests. I am equally pleased by the effort of 
Congressmen Kolbe, Flake, and Gutierrez who are introducing the House 
companion bill.
  While in previous years we worked independently on immigration reform 
legislation, we are coming together today to introduce what we believe 
is groundbreaking, comprehensive legislation. Over a year ago, the 
President laid out a framework for what comprehensive immigration 
reform should look like. We have used the President's framework to 
craft this package and I applaud the President for his leadership on 
this issue.
  The simple fact is that America's immigration system is broken. 
Recent vigilante activities along the southwestern border have shown 
that the current situation is not sustainable. Americans are frustrated 
with our lack of border security and our inability to control illegal 
immigration. We have spent billions of dollars on border enforcement. 
We have sent more, but still not enough, Federal agents to the border 
equipped with sophisticated technology. We have worked to harden the 
border in key places. And yet, illegal immigration continues.
  I would like to mention some startling statistics that demonstrate 
the critical need for immigration reform. I think the numbers speak for 
themselves: Over 300 people died last year trying to cross the border; 
about 200 of those deaths occurred in Arizona's desert. Last year 1.1 
million illegal immigrants were caught by the Border Patrol in 2004. 
Fifty-one percent of those were caught in Arizona. The Border Patrol is 
currently apprehending over 1,000 undocumented immigrants a day in 
Arizona. According to the FBI, an increasing number of these 
individuals are OTMs, Other Than Mexicans, from ``countries of 
interest.''
  Homeland security is our Nation's number one priority, and this 
legislation includes numerous provisions that together will make our 
nation more secure. This bill includes provisions to strengthen border 
security, both on our side of the border and throughout this 
hemisphere. Through the establishment of a new electronic employment 
verification system, the bill will create a more secure mechanism to 
better enforce our nation's immigration laws within our borders. 
Additionally, the bill enhances the authority of the Department of 
Labor and the Department of Homeland Security to conduct random audits 
to ensure that employers are holding up their end of the bargain. And 
if they aren't, they face double fines.
  Make no mistake, this is not an amnesty bill. We are not here to 
reward law-breakers, and any accusations to the contrary are patently 
untrue. This bill recognizes the problems inherent in the current 
system and provides a logical and effective means to address these 
problems. The reality is, there are an estimated million undocumented 
people living and working in this country. It would be impossible to 
identify and round up all 10 to 11 million of the current undocumented, 
and if we did, it would ground our Nation's economy to a halt. These 
millions of people are working. Aliens will not come forward to simply 
``report and deport.'' We have a national interest in identifying these 
individuals, incentivizing them to come forward out of the shadows, go 
through security background checks, pay back taxes, pay penalties for 
breaking the law, learn to speak English, and regularize their status. 
Anyone who thinks this goal can be achieved without providing an 
eventual path to a permanent legal status is not serious about solving 
this problem.
  Part of the failure of the existing system is its inability to 
provide sufficient legal channels to pair willing workers with willing 
employers. This bill establishes a new market-based temporary worker 
program so that when there is no U.S. worker to fill a job, employers 
will be able to hire willing and able foreign workers who have gone 
through security background checks, medical exams, and paid a fee for 
their visa. And, by doing away with outdated numerical caps on this 
program, this bill recognizes that the needs of the U.S. economy are 
constantly in flux, and our immigration system must match those needs.
  I don't believe there is another issue that is more important to our 
Nation than immigration reform. For far too long, our Nation's broken 
immigration laws have gone unreformed, leaving Americans vulnerable. We 
can no longer afford to delay reform.
  The complex and difficult problems associated with immigration reform 
will not be solved overnight, but they are among the most difficult 
challenges facing our Nation today. That is why it is so important that 
the President shares our commitment to comprehensive reform. Together 
with the President, I am committed to this process and remain very 
hopeful that we will succeed.
  I want to especially express my appreciation to Senator Kennedy and 
his staff for their sincere commitment to this critical issue. Also, 
the contributions to the bill as recommended by Senator Brownback have 
been invaluable to this effort. I would also like to thank Senator 
Lugar, who allowed us to incorporate critical international border 
enforcement provisions from his legislation, the North American 
Cooperative Security Act.
  Through the collective efforts of a wide range of bipartisan 
interests in both Houses of Congress, not to mention immigration 
advocacy groups, representatives of our Nation's businesses, and 
several labor unions, this comprehensive legislation provides a 
meaningful direction for how our immigration system should be reformed, 
and our border security strengthened.
  I look forward to working with all interested parties in the 
important and necessary effort to once and for all reform our broken 
immigration system.
  Mr. KENNEDY. Mr. President, it's an honor to join Senator McCain and 
Congressmen Gutierrez, Kolbe, and Flake in introducing our bipartisan 
legislation to reform the Nation's immigration laws. The status quo is 
unacceptable, and legislation is urgently needed to deal with all the 
inadequacies in our current law, to end the suffering of long-separated 
families imposed by the broken system, and to do so in a way that 
reflects current realities.
  We must modernize our broken immigration system to meet the 
challenges

[[Page 9612]]

of the 21st century. And we need policies that continue to reflect our 
best values as a nation--fairness, equal opportunity, and respect for 
the rule of law.
  One of the mistakes of the past is to assume that we can control 
illegal immigration on our own. A realistic immigration policy must be 
a two-way street. Under our plan, America will do its part, but we 
expect Mexico and other nations to do their part, too, to replace an 
illegal immigration flow with regulated, legal immigration.
  Our bill will make our immigration policies more realistic and 
enforceable, restore legality as the prevailing norm, and make it 
easier for immigrants to cooperate with local authorities. It will 
protect the labor rights of all workers, and create an even playing 
field for employers. It will strengthen our economy, restore control of 
our borders, and improve national security.
  Much of the Nation's economy today depends on the hard work and the 
many contributions of immigrants. Many industries depend heavily on 
immigrant labor. These men and women enrich our Nation and improve the 
quality of our lives. Yet, millions of today's immigrant workers are 
not here legally. They and their families live shadow lives in constant 
fear of deportation, and easy targets for abuse and exploitation by 
unscrupulous employers and criminals as well. Many risk great danger, 
and even death, to cross our borders.
  Our bill offers practical solutions to deal with these basic 
problems. It contains an earned legalization program for immigrants who 
have been working in the United States for at least 6 years, a way to 
reduce the enormous backlog of petitions to unify immigrant families, 
and a revised temporary worker program. The bill also contains strict 
border security and enforcement provisions, and measures to ensure that 
other countries do their part by requiring them to help control the 
flow of their citizens to jobs in the United States.
  We feel the bill is a realistic and practical solution to the complex 
immigration challenges facing the Nation for so long, and we've worked 
closely with as many interested groups as possible to make it fair to 
all.
  Despite our compromises and bipartisan solutions, there are some who 
oppose these reforms. They misleadingly categorize our efforts as 
``immigrant amnesty.'' They refuse to accept that these reforms simply 
create a legalization program for U.S. workers who have already been 
residing and working in the U.S. It is not a guarantee of citizenship, 
but an opportunity to continue working hard, start playing by the 
rules, and earn permanent residency.
  And by bringing immigrants out of the shadows so they can earn a fair 
day's pay for a fair day's work, we are protecting American workers' 
rights and wages, too.
  The legal status must be earned by proving past work contributions, 
making a substantial future work commitment, and paying of $2,000 in 
penalties.
  First, workers will receive temporary resident status, based on their 
past work contributions. To earn permanent residence, they must work 6 
more years. Otherwise, they will be dropped from the program and 
required to leave the country.
  It's not an amnesty for them, because they have to earn it. We offer 
a fair deal: if they are willing to work hard for us openly, then we're 
willing to do something fair for them. It is the only realistic 
solution.
  If there's any amnesty involved, it's what they have today--an 
acquiescence in their presence, because countless businesses could not 
function without them since no American workers can be found to fill 
their jobs. To be eligible for legal status, applicants must have no 
criminal or national security problems. All will be required to undergo 
rigorous security clearances. Their names will be checked against the 
government's criminal and terrorist databases, and the applicant's 
fingerprints will be sent to the FBI for a thorough background check.
  It's long past time to put the underground economy above ground, and 
recognize the reality of immigrants in our workforce. It's the only way 
to achieve effective enforcement rules to protect and strengthen our 
labor system, and to stabilize our workforce for employers.
  Our bill allows long-term, tax-paying immigrant workers to apply for 
earned adjustment of status. Studies show that there are now millions 
of illegal immigrants working in the U.S., and it would be 
irresponsible to continue to ignore this hidden past of our economic 
landscape.
  Our bill is also about fairness. It ensures that the rights of all 
workers are protected--that the rights to organize, to change jobs 
between employers, and to have fair wages, fair hours, and fair working 
conditions--cannot be denied. Through this legislation, America can be 
proud again that our Nation protects the safety and rights of all our 
workers.
  Our legislation is also about protecting families. Family unity has 
always been a fundamental cornerstone of America's immigration policy. 
Yet, millions of individuals today are waiting for immigrant visas to 
join with their families.
  Our bill will allow these families to be reunited more quickly and 
humanely. It also removes and amends unnecessary obstacles in current 
law that separate families, such as the affidavit-of-support 
requirements and the rigid bars to admissibility. Our bill contains 
provisions that will expedite visas to reunite spouses and children of 
legal immigrants with their loved ones. It also provides measures to 
clear up the backlog of employment-based visas.
  In addition, this bill recognizes the need for strong border 
protection and enforcement as part of immigration reform. It directs 
the Secretary of Homeland Security to develop and implement a National 
Strategy for Border Security to coordinate the efforts of Federal, 
State, local, and tribal authorities on border management and security. 
The Strategy will identify the areas most in need of enforcement and 
propose cost-effective ways to defend the border, including better ways 
of technology, improved intelligence-sharing and coordination. It also 
includes plans to combat human smuggling.
  To further improve border enforcement, the bill improves the security 
of Mexico's southern border and assesses the needs of Central American 
governments in securing their borders. It provides a framework for 
better management, communication, coordination, and immigration control 
for all our governments, and encourages other governments to control 
alien smuggling and trafficking, prevent the use and manufacture of 
fraudulent travel documents, and share relevant information.
  The bill also encourages so-called circular migration patterns. It 
provides for unprecedented cooperation with the governments of the 
United States, Canada, Mexico, and other Central American countries on 
issues of migration. It asks foreign countries to enter into agreements 
with the U.S. to help control the flow of their citizens to jobs in the 
U.S., with emphasis on encouraging the re-integration of citizens 
returning home.
  It also encourages the U.S. government to partner with Mexico to 
promote economic opportunity back home and reduce the pressure for its 
citizens to immigrate to the U.S. It encourages partnership between the 
U.S. and Mexico on health care, so that we are not unfairly burdened by 
the cost of administering health care to Mexican nationals.
  Further, the bill mandates that immigration-related documents issued 
by DHS be biometric, machine-readable, and tamper-resistant. It creates 
an Employment Eligibility Confirmation System, so that employers can 
verify an employee's identity and employment authorization, and an 
improved system to collect entry and exit data to determine the status 
of aliens after their arrival to and departure from the U.S. It 
protects against immigration fraud by improving regulations on who may 
appear in immigration matters.
  Another important component of our bill is its State Criminal Alien 
Assistance Program, to reimburse states for

[[Page 9613]]

the direct and indirect costs of incarcerating illegal aliens.
  We know that these reforms are long overdue. The illegal workers here 
today are not leaving, and new ones continue to come in. A significant 
part of the workforce in many sectors of the economy, especially 
agriculture, is undocumented. Massive deportations are unrealistic as 
policy, impractical to carry out, and unacceptable to businesses that 
rely heavily on their labor.
  Americans want and deserve realistic solutions to the very real 
immigration problems we face. They don't want open borders, and they 
don't want closed borders. They want smart borders, which mean fair and 
realistic immigration laws that can actually be enforced, immigration 
laws that protect our security, respect our ideals, and honor our 
heritage as a Nation of immigrants.
  America has been the Promised Land for generations of immigrants who 
have found haven, hope, opportunity and freedom here. Immigrants have 
always been an indispensable part of our Nation. They have contributed 
immensely to our communities, created new jobs and whole new 
industries, served in our armed forces, paid their taxes, and help make 
America the continuing land of promise it is today.
  It's obvious why the Nation's founders chose ``E Pluribus Unum''--
``out of many, one'' as America's motto two centuries ago. These words, 
chosen by Benjamin Franklin, John Adams, and Thomas Jefferson, referred 
to their ideal that tiny quarreling colonies could be transformed into 
one Nation, with one destiny. That basic ideal applies to individuals 
as well. Our diversity is our greatest strength.
  We are a Nation of immigrants, and we always will be, and our laws 
must be true to that proud heritage. Our bipartisan bill attempts to do 
that, and I look forward to working with the Administration and our 
colleagues on both sides of the aisle to enact it into law.

                          ____________________