101st CONGRESS

2d Session

H. R. 5835

AMENDMENT

HR 5835 EAS

In the Senate of the United States,

October 19 (legislative day, October 2), 1990.

Resolved, That the bill from the House of Representatives (H.R. 5 835) entitled `An Act to provide for reconciliation pursuant to section 4 of the concurrent resolution on the budget for fiscal year 1991' do pass with the fol lowing

AMENDMENT:

Strike out all after the enacting clause and insert:

SECTION 1. SHORT TITLE.

This Act may be cited as the `Omnibus Budget Reconciliation Act of 1990'.

SEC. 2. TABLE OF CONTENTS.

Title I--Committee on Agriculture, Nutrition, and Forestry.

Title II--Committee on Banking, Housing, and Urban Affairs.

Title III--Committee on Commerce, Science, and Transportation.

Title IV--Committee on Energy and Natural Resources.

Title V--Committee on Environment and Public Works.

Title VI--Committee on Finance--Spending Reductions.

Title VII--Committee on Finance--Revenues.

Title VIII--Committee on Governmental Affairs.

Title IX--Committee on the Judiciary.

Title X--Committee on Labor and Human Resources.

Title XI--Committee on Veterans Affairs.

TITLE I--COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

SEC. 1001. SHORT TITLE; TABLE OF CONTENTS.

(a) SHORT TITLE- This title may be cited as the `Agricultural Recon ciliation Act of 1990'.

(b) TABLE OF CONTENTS- The table of contents is as follows:
Sec. 1001. Short title; table of contents.

Subtitle A--Commodity Programs

Sec. 1101. Triple base for deficiency payments.

Sec. 1102. Calculation of deficiency payments.

Sec. 1103. Acreage reduction programs for 1991 through 1995 crops of wheat, feed grains, upland cotton, and rice.

Sec. 1104. Oilseed price support.

Sec. 1105. Dairy assessments.

Sec. 1106. Loan origination fees and program service fees.

Sec. 1107. Producer reserve program for wheat and feed grains.

Sec. 1108. Payment of interest on certificates.

Subtitle B--Other Agricultural Programs

Sec. 1201. Authorization levels for REA loans.

Sec. 1202. Authorization levels for FmHA loans.

Sec. 1203. APHIS inspection user fee on international passengers.

Sec. 1204. International sanctions.

Subtitle A--Commodity Programs

SEC. 1101. TRIPLE BASE FOR DEFICIENCY PAYMENTS.

(a) IN GENERAL- The Secretary of Agriculture (hereafter in this tit le referred to as the `Secretary', unless the context otherwise requires), in ma king available to producers deficiency payments otherwise authorized by law for each of the 1992 through 1995 crops of wheat, feed grains, upland cotton, and ri ce, shall compute the amount of such payments by multiplying--

(1) the payment rate; by

(2) the payment acres for the crop (as determined under subsect ion (b)); by

(3) the farm program payment yield for the crop for the farm.

(b) PAYMENT ACRES- For purposes of subsection (a)(2), payment acres for a crop shall be--

(1) the number of acres planted to the crop for harvest within the number of acres obtained by multiplying--

(A) the crop acreage base for the crop for the farm; by

(B) one minus the base reduction percentage (as determined under subsection (c)); less

(2) the quantity of reduced acreage (as determined under subsec tion (d)(1)).

(c) BASE REDUCTION PERCENTAGE- For purposes of subsection (b)(1)(B) , the base reduction percentage shall be 15 percent for each of the 1992 and 199 5 crops.

(d) REDUCED AND PERMITTED ACREAGE-

(1) REDUCED ACREAGE- For purposes of subsection (b)(2), the qua ntity of reduced acreage for a crop shall be the number of acres devoted to cons ervation uses that is determined by multiplying--

(A) the crop acreage base; by

(B) the percentage reduction required by the Secretary unde r an acreage limitation program announced by the Secretary.

(2) PERMITTED ACREAGE- The remaining acreage is hereafter in th is section referred to as `permitted acreage'.

(e) PLANTING COMMODITIES ON PERMITTED ACREAGE- The Secretary shall permit producers on a farm to plant on permitted acreage for which the producers do not receive deficiency payments--

(1) program crops (wheat, feed grains, cotton, or rice);

(2) oilseeds (soybeans, sunflower, canola, rapeseed, safflower, flaxseed, or any other oilseeds the Secretary may designate) or industrial or e xperimental crops; and

(3) any other crop, except any fruit or vegetable crop (includi ng potatoes and dry edible beans) not designated as an industrial or experimenta l crop by the Secretary.

(f) LOAN ELIGIBILITY- Producers on a farm who devote permitted acre age (for which the producers do not receive deficiency payments) to program crop s or oilseeds described in paragraphs (1) and (2) in subsection (e) shall be eli gible for loans under the Agricultural Act of 1949 (7 U.S.C. 1421 et seq.) with respect to the program crop produced on such acreage.

SEC. 1102. CALCULATION OF DEFICIENCY PAYMENTS.

(a) 12-MONTH AVERAGE- For purposes of calculating deficiency paymen ts for each of the 1991 through 1995 crops of wheat, feed grains, and rice, the payment rate for a crop shall be the amount by which the established price for t he crop exceeds--

(1) in the case of wheat and feed grains, the higher of--< /ul>

(A) the lesser of--

(i) the national weighted average market price received by producers during the marketing year for the crop, as determined by the Secre tary; or

(ii) the national weighted average market price receive d by producers during the first 5 months of the marketing year for the crop, as determined by the Secretary, plus 10 cents per bushel for wheat and 7 cents per bushel for feed grains; or

(B) the loan level determined for the crop; and

(2) in the case of rice, the higher of--

(A) the lesser of--

(i) the national average market price received by produ cers during the marketing year for the crop, as determined by the Secretary; or

(ii) the national average market price received by prod ucers during the first 5 months of the marketing year for the crop, as determine d by the Secretary, plus 27 cents per hundredweight; or

(B) the loan level determined for the crop.
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(b) ADJUSTMENT FOR BARLEY- For the purposes of determining the paym ent rate for deficiency payments for each of the 1991 through 1995 crops of barl ey, the Secretary shall include feed barley prices and malting barley prices in the computation of the national weighted average market price for barley, except that the Secretary shall exclude the portion of average malting barley prices r eceived by producers that exceeds prices received by producers for feed barley b y more than $0.50 per bushel.

SEC. 1103. ACREAGE REDUCTION PROGRAMS FOR 1991 THROUGH 1995 CROPS OF WHEAT, FEED GRAINS, UPLAND COTTON, AND RICE.

(a) MINIMUM PERCENTAGE REDUCTIONS- Except as provided in subsection (b), the Secretary shall announce an acreage limitation program for--

(1) each of the 1991 through 1995 crops of wheat under which th e acreage planted to wheat for harvest on a farm would be limited to the wheat c rop acreage base for the farm for the crop reduced by--

(A) in the case of the 1991 crop of wheat, not less than 15 percent;

(B) in the case of the 1992 crop of wheat, not less than 6 percent;

(C) in the case of the 1993 crop of wheat, not less than 5 percent;

(D) in the case of the 1994 crop of wheat, not less than 7 percent; and

(E) in the case of the 1995 crop of wheat, not less than 5 percent;

(2) each of the 1991 through 1995 crops of corn, grain sorghum, and barely under which the acreage planted to the respective feed grain for har vest on a farm would be limited to the respective feed grain crop acreage base f or the farm for the crop reduced by not less than 7 1/2 percent;

(3) each of the 1991 through 1995 crops of oats under which the acreage planted to oats for harvest on a farm would be limited to the oat crop acreage base for the farm for the crop, reduced by not less than 0 percent;

(4) each of the 1992 through 1995 crops of upland cotton under which the acreage planted to upland cotton for harvest on a farm would be limite d to the upland cotton crop acreage base for the farm for the crop reduced by--

(A) in the case of the 1992 crop of upland cotton, not less than 15 percent; and

(B) in the case of each of the 1993, 1994, and 1995 crops o f upland cotton, not less than 20 percent; and

(5) each of the 1992 through 1995 crops of rice under which the acreage planted to rice for harvest on a farm would be limited to the rice crop acreage base for the farm for the crop reduced by--

(A) in the case of the 1992 crop of rice, not less than 18 1/2 percent;

(B) in the case of the 1993 crop of rice, not less than 15 percent;

(C) in the case of the 1994 crop of rice, not less than 14 percent; and

(D) in the case of the 1995 crop of rice, not less than 10 percent.

(b) STOCKS-TO-USE RATIO- Notwithstanding any other provision of law , subsection (a) shall not apply to a crop if the Secretary estimates for such c rop that the stocks-to-use ratio will be less than--

(1) in the case of wheat, 34 percent;

(2) in the case of corn, grain sorghum, and barley, 20 percent;

(3) in the case of upland cotton, 30 percent; and

(4) in the case of rice, 16 percent.

SEC. 1104. OILSEED PRICE SUPPORT.

(a) IN GENERAL- Subject to subsection (b), in providing price suppo rt for oilseeds (soybeans, sunflower, canola, rapeseed, safflower, flaxseed, or any other oilseeds the Secretary may designate), the Secretary shall support the price of each of the 1991 through 1995 crops of--

(1) oilseeds at a level of not less than $5.50 per bushel;

(2) sunflower, canola, rapeseed, safflower, and flaxseed at a l evel of not less than $0.097 per pound; and

(3) other oilseeds at such level as the Secretary determines wi ll take into account the historical price relationship between each type of oils eeds and soybeans, the prevailing loan level for soybeans, and the historical me al oil content of each type of oilseeds and soybeans.

(b) Adjustment-

(1) SOYBEANS- Notwithstanding subsection (a), if the Secretary estimates, not later than September 30 of the year previous to the year in which the crop of soybeans is harvested that the stocks-to-use ratio for any of the 1 991 through 1995 crops of soybeans will be over 7.5 percent, the Secretary may e stablish the loan level for the crop at $5.00 per bushel.

(2) OTHER OILSEEDS- If the Secretary adjusts the loan level for a crop of soybeans under paragraph (1), the Secretary shall make a correspondin g adjustment in the loan level for sunflower seeds, canola, rapeseed, safflower, flaxseed, and any other oilseed designated by the Secretary under subsection (a ).

SEC. 1105. DAIRY ASSESSMENTS.

(a) IN GENERAL- The Secretary shall provide for a reduction in the price received by producers for all milk produced in the United States and marke ted for commercial use.

(b) AMOUNT- The amount of the reduction under subsection (a) in the price received by producers shall be 10 cents per hundredweight during the peri od beginning January 1, 1991, and ending August 31, 1995.

(c) ADMINISTRATION- The funds represented by the reduction in price , required under this section to be applied to the marketings of milk by a produ cer, shall be collected and remitted to the Commodity Credit Corporation, at suc h time and in such manner as prescribed by the Secretary, by each person making payment to a producer for milk purchased from the producer, except that in the c ase of a producer who markets milk of the producer's own production directly to consumers, the funds shall be remitted directly to the Corporation by the produc er.

SEC. 1106. LOAN ORIGINATION FEES AND PROGRAM SERVICE FEES.

(a) SUGAR, HONEY, PEANUTS, AND TOBACCO- Effective for each of the 1 991 through 1995 crops of sugar beets, sugarcane, honey, peanuts, and tobacco, the Secretary shall charge the producer a loan origination fee for a price suppo rt loan for such crops equal to 3 percent of the amount of the loan.

(b) WOOL- Effective for each of the 1991 through 1995 marketing yea rs for wool and mohair, in connection with making price support available for su ch marketing years, the Secretary shall charge producers of wool and mohair a pr ogram service fee equal to not more 1 percent of the amount of the payment rate for wool and mohair for such marketing year as provided under the National Wool Act of 1954 (7 U.S.C. 1781 et seq.).

SEC. 1107. PRODUCER RESERVE PROGRAM FOR WHEAT AND FEED GRAINS.
(a) IN GENERAL- In carrying out any producer reserve program for wh eat and feed grains otherwise authorized by law, the Secretary shall formulate a nd administer such a producer storage program under which producers of wheat and feed grains will be able to store wheat and feed grains when the commodities ar e in abundant supply, extend the time period for the orderly marketing of the co mmodities, and provide for adequate carryover stocks to ensure a reliable supply of the commodities as provided in this section.

(b) Terms of Program-

(1) PRICE SUPPORT LOANS- In carrying out such a program, the Se cretary shall provide original or extended price support loans for wheat and fee d grains under terms and conditions designed to encourage producers to store whe at and feed grains for extended periods of time whenever the supply of wheat and feed grains are in abundant supply, as determined by the Secretary, or whenever the price of wheat or feed grains is less than 110 percent of the loan rate est ablished under this title for wheat and feed grains.

(2) LEVEL OF LOANS- Loans made under such a program shall not b e less than the then current level of support under the wheat and feed grain pro grams established under this title.

(3) OTHER TERMS AND CONDITIONS- Under such a program, the Secre tary shall provide for--

(A) loans with a maturity of not less than 3 years, with ex tensions as warranted by market conditions;

(B) a rate of interest as provided under subsection (c); an d

(C) payments to producers for storage as provided in subsec tion (d).

(4) REGIONAL DIFFERENCES- The Secretary shall ensure that produ cers are afforded a fair and equitable opportunity to participate in the program established under this section, taking into account regional differences in the time of harvest.

(c) INTEREST CHARGES-

(1) LEVYING OF INTEREST- The Secretary may charge interest on l oans under such a program whenever the price of wheat or feed grains is equal to or exceeds the then current established price for the commodities.

(2) 90-DAY PERIOD- If interest is levied on the loans under par agraph (1), the interest may be charged for a period of 90 days after the last d ay on which the price of wheat or feed grains was equal to or in excess of the t hen current established price for the commodities.

(3) RATE OF INTEREST- The rate of interest charged participants in such a program shall not be less than the rate of interest charged by the Co mmodity Credit Corporation by the United States Treasury, except that the Secret ary may waive or adjust the interest as the Secretary considers appropriate to e ffectuate the purposes of this section.

(d) Storage Payments-

(1) IN GENERAL- The Secretary shall provide storage payments to producers for storage of wheat or feed grains under such a program in such amou nts and under such conditions as the Secretary determines appropriate to encoura ge producers to participate in such a program.

(2) TIMING- The Secretary shall make storage payments available to participants in such a program at the end of each quarter.

(3) DURATION- The Secretary may cease making storage payments w henever the price of wheat or feed grains is equal to or exceeds the then curren t established price for the commodities, and for any 90-day period immediately f ollowing the last day on which the price of wheat or feed grains was equal to or in excess of the then current established price for the commodities.
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(e) EMERGENCIES- Notwithstanding any other provision of law, the Se cretary may require producers to repay loans under such a program, plus accrued interest and such other charges as may be required by regulation prior to the ma turity date thereof, if the Secretary determines that emergency conditions exist that require that the commodity be made available in the market to meet urgent domestic or international needs and the Secretary reports the determination and the reasons for the determination to the President, the Committee on Agriculture of the House of Representatives, and the Committee on Agriculture, Nutrition, a nd Forestry of the Senate at least 14 days before taking the action.

(f) QUANTITY OF COMMODITIES IN PROGRAM- The Secretary may establish maximum quantities of wheat and feed grains that may receive loans and storage payments under such a program as follows:

(1) The maximum quantities may not be established at less than 300 million bushels of wheat and 600 million bushels of feed grains.

(2) The maximum quantities may not be established at more than- -

(A) 30 percent of the estimated total domestic and export u sage of wheat during the marketing year for the crop of wheat, as determined by the Secretary; and

(B) 15 percent of the estimated total domestic and export u sage of feed grains during the marketing year for the crop, as determined by the Secretary.

(3) Notwithstanding paragraph (2), the Secretary may establish the upper limits at higher levels, not in excess of 110 percent of the levels es tablished in paragraph (2), if the Secretary determines that the higher limits a re necessary to achieve the purposes of such a program.

(g) Announcement of Program-

(1) TIME OF ANNOUNCEMENT- The Secretary shall announce the term s and conditions of such a producer storage program as far in advance of making loans as practicable.

(2) CONTENT OF ANNOUNCEMENT- In the announcement, the Secretary shall specify the quantity of wheat or feed grains to be stored under such a pr ogram that the Secretary determines appropriate to promote the orderly marketing of the commodities.

(h) RECONCENTRATION OF GRAIN- The Secretary may, with the concurren ce of the owner of grain stored under such a program, reconcentrate all such gra in stored in commercial warehouses at such points as the Secretary considers to be in the public interest, taking into account such factors as transportation an d normal marketing patterns. The Secretary shall permit rotation of stocks and f acilitate maintenance of quality under regulations that assure that the holding producer or warehouseman shall, at all times, have available for delivery at the designated place of storage both the quantity and quality of grain covered by t he producer's or warehouseman's commitment.

(i) MANAGEMENT OF GRAIN- Whenever grain is stored under such a prog ram, the Secretary may buy and sell at an equivalent price, allowing for the cus tomary location and grade differentials, substantially equivalent quantities of grain in different locations or warehouses to the extent needed to properly hand le, rotate, distribute, and locate the commodities that the Commodity Credit Cor poration owns or controls. The purchases to offset sales shall be made within 2 market days following the sales. The Secretary shall make a daily list available showing the price, location, and quantity of the transactions.

(j) USE OF COMMODITY CERTIFICATES- Notwithstanding any other provis ion of law, if a producer has substituted purchased or other commodities for the commodities originally pledged as collateral for a loan made under such a progr am, the Secretary may allow a producer to repay the loan using a generic commodi ty certificate that may be exchanged for commodities owned by the Commodity Cred it Corporation, if the substitute commodities have been pledged as loan collater al and redeemed only within the same county.

SEC. 1108. PAYMENT OF INTEREST ON CERTIFICATES.

Section 107E of the Agricultural Act of 1949 (7 U.S.C. 1445b-4) is amended by adding at the end the following new subsection:

`(c)(1) Except as provided in paragraph (2), the Secretary shall pa y interest on the cash redemption of a commodity certificate issued by the Secre tary to a producer who holds the certificate for at least 150 days.

`(2) This subsection shall not apply to a commodity certificate iss ued under the export enhancement program or the marketing promotion program.'.

Subtitle B--Other Agricultural Programs

SEC. 1201. AUTHORIZATION LEVELS FOR REA LOANS.

(a) IN GENERAL- Subject to the other provisions of this section and notwithstanding any other provision of law, for each of fiscal years 1991 throu gh 1995, loans may be insured in accordance with the Rural Electrification Act o f 1936 (7 U.S.C. 901 et seq.) from the Rural Electrification and Telephone Revol ving Fund established under section 301 of such Act (7 U.S.C. 931) in amounts eq ual to the following levels:

(1) For fiscal year 1991, $896,000,000.

(2) For fiscal year 1992, $932,000,000.

(3) For fiscal year 1993, $969,000,000.

(4) For fiscal year 1994, $1,008,000,000.

(5) For fiscal year 1995, $1,048,000,000.

(b) REDUCTION- Notwithstanding any other provision of law, for each of fiscal years 1991 through 1995, the Administrator of the Rural Electrificati on Administration shall reduce the amounts otherwise made available for insured loans made from the Rural Electrification and Telephone Revolving Fund by--

(1) $224,000,000 for fiscal year 1991;

(2) $234,000,000 for fiscal year 1992;

(3) $244,000,000 for fiscal year 1993;

(4) $256,000,000 for fiscal year 1994; and

(5) $267,000,000 for fiscal year 1995.

(c) MANDATORY LEVELS- Notwithstanding any other provision of law, t he Administrator shall insure loans at the levels authorized by this section for each of fiscal years 1991 through 1995.

(d) GUARANTEED LOANS- Notwithstanding any other provision of law, i n carrying out the Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.), the Administrator shall increase the amounts otherwise made available to guarantee loans made by legally organized lending agencies. The loans shall be guaranteed at 99 percent of the principal amount of the loan.

SEC. 1202. AUTHORIZATION LEVELS FOR FmHA LOANS.

(a) IN GENERAL- Subject to the other provisions of this section and notwithstanding any other provision of law, for each of fiscal years 1991 throu gh 1995, real estate and operating loans may be insured, made to be sold and ins ured, or guaranteed in accordance with subtitles A and B, respectively, of the C onsolidated Farm and Rural Development Act (7 U.S.C. 1921 et seq.) from the Agri cultural Credit Insurance Fund established under section 309 of such Act (7 U.S. C. 1929) in amounts equal to the following levels:

(1) For fiscal year 1991, $4,175,000,000, of which not less tha n $827,000,000 shall be for farm ownership loans under subtitle A of such Act.

(2) For fiscal year 1992, $4,343,000,000, of which not less tha n $861,000,000 shall be for farm ownership loans under subtitle A of such Act.

(3) For fiscal year 1993, $4,516,000,000, of which not less tha n $895,000,000 shall be for farm ownership loans under subtitle A of such Act.

(4) For fiscal year 1994, $4,697,000,000, of which not less tha n $931,000,000 shall be for farm ownership loans under subtitle A of such Act.

(5) For fiscal year 1995, $4,885,000,000, of which not less tha n $968,000,000 shall be for farm ownership loans under subtitle A of such Act.

(b) APPORTIONMENT OF INSURED AND GUARANTEED LOANS- Subject to subse ction (c), the amounts set forth in subsection (a) shall be apportioned as follo ws:

(1) For fiscal year 1991--

(A) $1,019,000,000 for insured loans, of which not less tha n $83,000,000 shall be for farm ownership loans; and

(B) $3,156,000,000 for guaranteed loans, of which not less than $744,000,000 shall be for guarantees of farm ownership loans.

(2) For fiscal year 1992--

(A) $1,060,000,000 for insured loans, of which not less tha n $87,000,000 shall be for farm ownership loans; and

(B) $3,283,000,000 for guaranteed loans, of which not less than $774,000,000 shall be for guarantees of farm ownership loans.

(3) For fiscal year 1993--

(A) $1,102,000,000 for insured loans, of which not less tha n $90,000,000 shall be for farm ownership loans; and

(B) $3,414,000,000 for guaranteed loans, of which not less than $805,000,000 shall be for guarantees of farm ownership loans.

(4) For fiscal year 1994--

(A) $1,147,000,000 for insured loans, of which not less tha n $94,000,000 shall be for farm ownership loans; and

(B) $3,550,000,000 for guaranteed loans, of which not less than $837,000,000 shall be for guarantees of farm ownership loans.

(5) For fiscal year 1995--

(A) $1,192,000,000 for insured loans, of which not less tha n $97,000,000 shall be for farm ownership loans; and

(B) $3,693,000,000 for guaranteed loans, of which not less than $871,000,000 shall be for guarantees of farm ownership loans.

(c) TRANSFER OF FUNDS FROM INSURED TO GUARANTEED LOANS- Notwithstan ding any other provision of law, for each of fiscal years 1991 through 1995, the Secretary shall--

(1) reduce the amounts otherwise made available for insured loa ns made from the Agricultural Credit Insurance Fund by--

(A) $319,000,000 for fiscal year 1991;

(B) $460,000,000 for fiscal year 1992;

(C) $602,000,000 for fiscal year 1993;

(D) $697,000,000 for fiscal year 1994; and

(E) $792,000,000 for fiscal year 1995; and

(2) use the funds made available from the reduction made in par agraph (1) in the available amount of insured loans in each of the fiscal years to guarantee loans made from the Fund.

(c) MANDATORY LEVELS- Notwithstanding any other provision of law, t he Secretary shall make or insure loans at the levels authorized by this section for each of fiscal years 1991 through 1995.

SEC. 1203. APHIS INSPECTION USER FEE ON INTERNATIONAL PASSENGERS.

(a) IN GENERAL- The Secretary may prescribe and collect fees to cov er the cost of providing agricultural quarantine and inspection services in conn ection with the arrival at a port in the customs territory of the United States, or the preclearance or preinspection at a site outside the customs territory of the United States, of an international passenger.

(b) TREASURY- Any person who collects a fee under this section shal l remit the fee to the Treasury of the United States prior to the date that is 3 1 days after the close of the calendar quarter in which the fee is collected.

(c) Agricultural Quarantine Inspection User Fee Account-

(1) ESTABLISHMENT- There is established in the Treasury of the United States a no-year fund, to be known as the `Agricultural Quarantine Inspec tion User Fee Account' (hereafter in this section referred to as the `Account'), for the use of the Secretary of Agriculture for quarantine or inspection servic es under this section.

(2) Amounts in account-

(A) DEPOSITS- All fees collected under this subsection shal l be deposited in the Account.

(B) AUTHORIZATION OF APPROPRIATIONS- There are authorized t o be appropriated amounts in the Fund for use by the Secretary of Agriculture fo r quarantine or inspection services.

(d) ADJUSTMENT IN FEE AMOUNTS- The Secretary shall adjust the amoun t of the fees to be assessed under this section to reflect the cost to the Secre tary in--

(1) administering this section;

(2) carrying out the activities at ports in the customs territo ry of the United States and preclearance and preinspection sites outside the cus toms territory of the United States in connection with the provision of agricult ural quarantine inspection services; and

(3) maintaining a reasonable balance in the Account.
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SEC. 1204. INTERNATIONAL SANCTIONS.

Notwithstanding any other provision of law, title XXIII of S. 2830 (as passed by the Senate on July 27, 1990) shall have no force and effect.< /ul>
TITLE II--COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

Subtitle A--Federal Deposit Insurance Premiums

Sec. 2001. Short title.

Sec. 2002. FDIC authorized to increase assessment rates as necess ary to protect insurance funds.

Sec. 2003. FDIC authorized to make mid-year adjustments in assess ment rates.

Sec. 2004. FDIC authorized to set designated reserve ratio as nec essary in face of significant risk of substantial losses to insurance fund.

Sec. 2005. FDIC authorized to borrow from Federal Financing Bank.

Sec. 2006. Priority of certain claims.

Subtitle B--FHA Mortgage Insurance

Sec. 2101. FHA ceiling.

Sec. 2102. Reverse mortgage insurance.

Sec. 2103. Actuarial soundness for the mutual mortgage insurance fund.

Sec. 2104. Risk-based periodic mortgage insurance premium.

Sec. 2105. Mortgagor equity in the basic FHA home mortgage insura nce program.

Sec. 2106. Mutual mortgage insurance fund distributions.

Subtitle C--Mortgage Assignments

Sec. 2201. Amendment to section 221(g)(4) of the National Housing Act.

Subtitle D--Crime and Flood Insurance Programs

Sec. 2301. Crime insurance program.

Sec. 2302. Flood insurance program.

TITLE II--COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

Subtitle A--Federal Deposit Insurance Premiums

SEC. 2001. SHORT TITLE.

This Act may be cited as the `FDIC Premium Act of 1990'.

SEC. 2002. FDIC AUTHORIZED TO INCREASE ASSESSMENT RATES AS NECESSARY TO PROTECT INSURANCE FUNDS.

(a) BANK INSURANCE FUND- Section 7(b)(1)(C) of the Federal Deposit Insurance Act (12 U.S.C. 1817(b)(1)(C)) is amended to read as follows:

`(C) ASSESSMENT RATE FOR BANK INSURANCE FUND MEMBERS-

`(i) IN GENERAL- The assessment rate for Bank Insurance Fun d members shall be the greater of 0.15 percent or such rate as the Board of Dire ctors, in its sole discretion, determines to be appropriate--

`(I) to maintain the reserve ratio at the designated re serve ratio; or

`(II) if the reserve ratio is less than the designated reserve ratio, to increase the reserve ratio to the designated reserve ratio wit hin a reasonable period of time.

`(ii) FACTORS TO BE CONSIDERED- In making any determination under clause (i), the Board of Directors shall consider the Bank Insurance Fund 's expected operating expenses, case resolution expenditures, and income, the ef fect of the assessment rate on members' earnings and capital and on the safety a nd soundness of the financial system, and such other factors as the Board of Dir ectors may deem appropriate.

`(iii) MINIMUM ASSESSMENT- Notwithstanding clause (i), the assessment shall not be less than $1,000 for each member in each year.'.

(b) SAVINGS ASSOCIATION INSURANCE FUND- Section 7(b)(1)(D) of the F ederal Deposit Insurance Act (12 U.S.C. 1817(b)(1)(D)) is amended to read as fol lows:

`(D) ASSESSMENT RATE FOR SAVINGS ASSOCIATION INSURANCE FUND MEM BERS-

`(i) IN GENERAL- The assessment rate for Savings Associatio n Insurance Fund members shall be the greater of 0.15 percent or such rate as th e Board of Directors, in its sole discretion, determines to be appropriate--

`(I) to maintain the reserve ratio at the designated re serve ratio; or

`(II) if the reserve ratio is less than the designated reserve ratio, to increase the reserve ratio to the designated reserve ratio wit hin a reasonable period of time.

`(ii) FACTORS TO BE CONSIDERED- In making any determination under clause (i), the Board of Directors shall consider the Savings Association Insurance Fund's expected operating expenses, case resolution expenditures, and income (not including anticipated Treasury payments), the effect of the assessm ent rate on members' earnings and capital and on the safety and soundness of the financial system, and such other factors as the Board of Directors may deem app ropriate.

`(iii) MINIMUM ASSESSMENT- Notwithstanding clause (i), the assessment shall not be less than $1,000 for each member in each year.

`(iv) TRANSITION RULE- Until December 31, 1997, the assessm ent rate for Savings Association Insurance Fund members shall not be less than t he following:

`(I) From January 1, 1990, through December 31, 1990, 0 .208 percent.

`(II) From January 1, 1991, through December 31, 1993, 0.23 percent.

`(III) From January 1, 1994, through December 31, 1997, 0.18 percent.'.

(c) CLERICAL AMENDMENTS REFLECTING $1,000 MINIMUM ASSESSMENT PROVIS IONS OF CURRENT LAW- Section 7(b)(2)(A) of the Federal Deposit Insurance Act (12 U.S.C. 1817(b)(2)(A)) is amended--

(1) by inserting `or subparagraph (C)(iii) or (D)(iii) of subse ction (b)(1)' after `subsection (c)(2)'; and

(2) in clauses (i) and (ii), by inserting `the greater of $500 or an amount' before `equal to the product of'.

SEC. 2003. FDIC AUTHORIZED TO MAKE MID-YEAR ADJUSTMENTS IN ASSESSMENT RATES.

(a) ASSESSMENT RATES- Section 7(b)(1)(A) of the Federal Deposit Ins urance Act (12 U.S.C. 1817(b)(1)(A)) is amended to read as follows:

`(A) ASSESSMENT RATES PRESCRIBED-

`(i) AUTHORITY TO SET RATES- Subject to clause (iii), the C orporation shall set assessment rates for insured depository institutions at suc h times as the Corporation, in its sole discretion, determines to be appropriate .

`(ii) RATE FOR EACH FUND TO BE SET INDEPENDENTLY- The Corpo ration shall fix the assessment rate of Bank Insurance Fund members independentl y from the assessment rate for Savings Association Insurance Fund members.< /ul>

`(iii) DEADLINE FOR ANNOUNCING RATE CHANGES- The Corporatio n shall announce any change in assessment rates-

`(I) for the semiannual period beginning on January 1 a nd ending on June 30, not later than the preceding November 1; and

`(II) for the semiannual period beginning on July 1 and ending on December 31, not later than the preceding May 1.'.

(b) ASSESSMENT PROCEDURES- Section 7(b)(2)(A) of the Federal Deposi t Insurance Act (12 U.S.C. 1817(b)(2)(A)), as amended by section 2(c) of this Ac t, is amended--

(1) by striking `annual' each time it appears;

(2) in clause (i)(I), by inserting `during that semiannual peri od' after `member'; and

(3) in clause (ii)(I), by inserting `during that semiannual per iod' after `member'.

(c) CONFORMING AMENDMENT ON TIMING OF ASSESSMENT CREDITS- Section 7 (d)(1)(A) of the Federal Deposit Insurance Act (12 U.S.C. 1817(d)(1)(A)) is amen ded to read as follows:

`(A) The Corporation shall prescribe and publish the aggregate amount to be credited to insured depository institutions--

`(i) in the semiannual period beginning on January 1 and en ding on June 30, not later than the preceding November 1; and

`(ii) in the semiannual period beginning on July 1 and endi ng on December 31, not later than the preceding May 1.'.

SEC. 2004. FDIC AUTHORIZED TO SET DESIGNATED RESERVE RATIO AS NECESSA RY IN FACE OF SIGNIFICANT RISK OF SUBSTANTIAL LOSSES TO INSURANCE FUND.

Section 7(b)(1)(B) of the Federal Deposit Insurance Act (12 U.S.C. 1817(b)(1)(B)) is amended--

(1) by striking `, not exceeding 1.50 percent,' each time it ap pears;

(2) in clause (iii)--

(A) by inserting `and' at the end of subclause (I);

(B) by striking subclauses (II) and (III); and

(C) by redesignating subclause (IV) as subclause (II); and

(3) in clause (iv)--

(A) by inserting `and' at the end of subclause (I);

(B) by striking subclauses (II) and (III); and

(C) by redesignating subclause (IV) as subclause (II).

SEC. 2005. FDIC AUTHORIZED TO BORROW FROM FEDERAL FINANCING BANK.

Section 14 of the Federal Deposit Insurance Act (12 U.S.C. 1824) is amended--

(1) in the heading, by striking `SEC. 14.' and inserting:< /ul>

`SEC. 14. BORROWING AUTHORITY.

`(a) BORROWING FROM TREASURY- ';

(2) in subsection (a), as designated by paragraph (1)--

(A) by striking `this section' each time it appears and ins erting `this subsection', and

(B) by striking `The Corporation may employ such funds' and inserting `The Corporation may employ any funds obtained under this section onl y'; and

(3) by adding after subsection (a), as amended by paragraph (2) , the following new subsection:

`(b) BORROWING FROM FEDERAL FINANCING BANK- The Corporation is auth orized to issue and sell the Corporation's obligations to the Federal Financing Bank established by the Federal Financing Bank Act of 1973. The Federal Financin g Bank is authorized to purchase and sell the Corporation's obligations on terms and conditions determined by the Federal Financing Bank.'.

SEC. 2006. PRIORITY OF CERTAIN CLAIMS.

(a) IN GENERAL- Section 11 of the Federal Deposit Insurance Act (12 U.S.C. 1821) is amended by adding at the end the following:

`(p) PRIORITY OF CERTAIN CLAIMS- (1) Subject to paragraph (2), in a ny proceeding brought by the Corporation related to any claim acquired under thi s section or section 12 or 13 against an insured depository institution's direct or, officer, employee, agent, attorney, accountant, appraiser, or any other part y employed by or providing services to an insured depository institution, any su it, claim, or cause of action brought by the Corporation shall have priority ove r any suit, claim, or cause of action asserted against that person by a deposito r, creditor, or shareholder of the insured depository institution other than a s uit, claim, or cause of action asserted by a Federal agency (other than the Corp oration) or the United States.

`(2)(A) If the Corporation is notified in writing of the commenceme nt of a suit, claim, or cause of action asserted by a depositor, creditor, or sh areholder of an insured depository institution in a proceeding described in para graph (1), a suit, claim, or cause of action of the Corporation shall not have p riority under paragraph (1) unless--

`(i) not later than 180 days after the date on which the Corpor ation receives the notice, or if the Corporation acquires its claim after receip t of the notice, not later than 180 days after the date on which the Corporation acquires its claim, the Corporation files with the court a statement that the C orporation intends to pursue potential claims against the insured depository ins titution's director, officer, employee, agent, attorney, accountant, appraiser, or other person employed by or providing services to the insured depository inst itution and is diligently pursuing its claims; and

`(ii) not later than 1 year after the date on which the Corpora tion receives the notice (or, if the Corporation acquires its claim after receip t of the notice, not later than 1 year after the date on which the Corporation a cquires its claim), the Corporation files suit, unless the court enlarges the ti me for filing suit pursuant to subparagraph (B).

`(B)(i) If the Corporation requests an enlargement of time to file a suit described in subparagraph (A)(ii), the court shall extend the period for the Corporation to commence its proceeding unless the court finds that the preju dice that would result to a person's ability to prove the person's claim that wo uld result from a grant of the requested enlargement of time would outweigh the harm to the Government that would result from a denial of the requested enlargem ent of time.

`(ii) In making a finding under clause (i), the court shall conside r the diligence with which the Corporation is investigating its claim.

`(3) The priority of the Corporation shall apply both to the prosec ution of any suit, claim, or cause of action, and to the execution of any subseq uent judgment resulting from such suit, claim, or cause of action.

`(4) This subsection shall not be construed to afford the Corporati on priority as to an asset that is adjudicated to be unavailable to satisfy any subsequent judgment obtained by the Corporation as a result of its suit, claim, or cause of action.'.

(b) APPLICABILITY- The amendment made by subsection (a) shall not a pply to suits, claims, or causes of action of depositors, creditors, or sharehol ders commenced before the date of enactment of this Act.

Subtitle B--FHA Mortgage Insurance

SEC. 2101. FHA CEILING.

Section 203(b)(2) of the National Housing Act (12 U.S.C. 1709(b)(2) ) is amended by striking `150 percent (185 percent until October 31, 1990) of th e dollar amount specified' and inserting the following: `185 percent of the doll ar amount specified'.

SEC. 2102. REVERSE MORTGAGE INSURANCE.

(a) LIMITATION ON INSURANCE AUTHORITY AND MAXIMUM AMOUNT INSURED- S ection 255(g) of the National Housing Act (12 U.S.C. 1715z-20(g)) is amended by striking `1991' and inserting `1993', and by striking the second sentence and in serting the following: `The total number of mortgages insured under this section may not exceed 25,000.'.

(b) TYPES OF LOANS- Section 255(d) of the National Housing Act (12 U.S.C. 1715z-20(d)) is amended--

(1) in paragraph (7), by striking `and' at the end;

(2) in paragraph (8), by striking the period at the end and ins erting a semicolon; and

(3) by adding at the end the following:

`(9) provide for future payments to the mortgagor based on accu mulated equity (minus any applicable fees and charges), according to the method that the mortgagor shall select from among the methods under this paragraph, by payment of the amount--

`(A) based upon a line of credit;

`(B) on a monthly basis over a term specified by the mortga gor;

`(C) on a monthly basis over a term specified by the mortga gor and based on a line of credit;

`(D) on a monthly basis over the tenure of the mortgagor;

`(E) on a monthly basis over the tenure of the mortgagor an d based upon a line of credit; or

`(F) on any other basis that the Secretary considers approp riate; and

`(10) provide that the mortgagor may convert the method of paym ent under paragraph (9) to any other method during the term of the mortgage, exc ept that for fixed rate mortgages, the Secretary may prescribe regulations limit ing convertability under this paragraph.'.

(c) LIMITATION ON LIABILITY OF MORTGAGOR- Section 255(d)(7) of the National Housing Act (12 U.S.C. 1715z-20(d)(7)) is amended by striking subparagr aph (A) and inserting the following new subparagraph:

`(A) the net sales proceeds from the dwelling that are subj ect to the mortgage (based upon the amount of the accumulated equity selected by the mortgagor subject to the mortgage, as agreed upon by the mortgagor and mort gagee); or'.

SEC. 2103. ACTUARIAL SOUNDNESS FOR THE MUTUAL MORTGAGE INSURANCE FUND .

Section 205 of the National Housing Act (12 U.S.C. 1711) is amended by adding the following new subsections at the end thereof:

`(e)(1) The Secretary shall ensure that the Mutual Mortgage Insuran ce Fund attains a capital ratio of at least 1.25 percent within 18 months of the date of enactment of this subsection, and shall ensure that at least this ratio is maintained at all times thereafter. If the Secretary determines that the Fun d does not have a capital ratio of at least 1.25 percent at any time from the da te of enactment of this subsection, the Secretary shall, at least annually, repo rt to the Congress on the financial status of the Fund, advise the Congress of a ny administrative measures being taken to attain and maintain a capital ratio of at least 1.25 percent, and make any legislative recommendations that the Secret ary deems appropriate.

`(2) The Secretary shall endeavor to ensure that the Mutual Mortgag e Insurance Fund attains and maintains a capital ratio of at least 2 percent. Be ginning 3 years from the date of enactment of this subsection, the Secretary sha ll report annually to the Congress on the financial status of the Mutual Mortgag e Insurance Fund and efforts to meet the capital ratio goal of at least 2 percen t.

`(3) For purposes of this subsection--

`(A) the term `capital' means the economic net worth of the Mut ual Mortgage Insurance Fund, as determined by the Secretary under the annual aud it required by section 538 of this Act;

`(B) the term `economic net worth' means the current cash avail able to the Fund, plus the net present value of all future cash inflows and outf lows expected to result from the outstanding mortgages in the Fund;

`(C) the term `capital ratio' means the ratio of capital to una mortized insurance-in-force; and

`(D) the term `unamortized insurance-in-force' means the Secret ary's estimate of the remaining obligation on outstanding mortgages which are ob ligations of the Mutual Mortgage Insurance Fund.

`(f) The Secretary shall annually conduct an independent actuarial study of the Mutual Mortgage Insurance Fund.

`(g) If the independent annual actuarial study of the Mutual Mortga ge Insurance Fund required under subsection (f) shows that the Mutual Mortgage I nsurance Fund is not meeting the following principles of operation:

`(1) maintaining an adequate capital ratio as defined in subsec tions (e)(1) and (e)(2); and

`(2) Meeting the needs of first-time homebuyers by providing ac cess to mortgage credit; and

`(3) Avoiding the problems of adverse selection by establishing premiums related to the probability of homeowner default; and

`(4) Minimizing the risk to the Fund and to homeowners from hom eowner default;

then the Secretary may propose through regulation and implement any a djustments to the insurance premiums referred to in section 203(c), or any other program requirements established by the Secretary, as is necessary to achieve t hese principles. As soon as the Secretary determines that a premium or other cha nge is appropriate under the preceding sentence, the Secretary shall immediately notify Congress of the proposed change and the reasons for it. Such premium cha nge shall take effect not earlier than 90 days following such notification, unle ss Congress acts during such time to prevent it.'.

SEC. 2104. RISK-BASED PERIODIC MORTGAGE INSURANCE PREMIUM.

Section 203(c) of the National Housing Act (12 U.S.C. 1709(c)) is a mended by adding at the end thereof the following:

`Notwithstanding any other provision of law, the Secretary may requ ire payment on mortgages which are obligations of the Mutual Mortgage Insurance Fund of an additional premium charge on a periodic basis as determined by the Se cretary to be consistent with sound actuarial practice and taking into account h igh loan-to-value ratios. Such determination shall be in accordance with the fin dings of the annual actuarial study of the Mutual Mortgage Insurance Fund requir ed under section 205(e). The additional premium charge may not exceed an amount equivalent to one-half of 1 percent per year of the amount of the principal o bligation of the mortgage outstanding at any time, without taking into account d elinquent payments or prepayments, and may be required (A) for up to 15 years if the initial loan-to-value ratio of the mortgage is greater than 95 percent, (B) for up to 10 years if the initial loan-to-value ratio is equal to or less than 95 percent but equal to or greater than 93 percent, and (C) for up to 4 years if the initial loan-to-value ratio is less than 93 percent but greater than or equ al to 90 percent. The Secretary may establish a periodic premium rate higher tha n that referred to in the preceding sentence if necessary to achieve actuarial s oundness. The Secretary shall not require payment of an additional premium charg e where the initial loan-to-value ratio of the mortgage is less than 90 percent. For purposes of this paragraph, the premium charges shall not be included in th e determination of the initial loan-to-value ratio of the mortgage.'.

SEC. 2105. MORTGAGOR EQUITY IN THE BASIC FHA HOME MORTGAGE INSURANCE PROGRAM.

Section 203(b)(2) of the National Housing Act (12 U.S.C. 1709(b)(2) ) is amended by inserting at the end thereof the following new paragraph.
`Notwithstanding any other provision of this paragraph, a mortgage may not have a principal obligation in excess of 98 percent of the appraised val ue of the property (97 percent, in the case of a mortgage with an appraised valu e in excess of $50,000), plus the amount of the mortgage insurance premium paid at the time the mortgage is insured. For purposes of the preceding sentence, `ap praised value' shall be the amount set forth in the written statement required by section 226, or a similar amount determined by the Secretary if section 226 d oes not apply.'.

SEC. 2106. MUTUAL MORTGAGE INSURANCE FUND DISTRIBUTIONS.

Section 205 of the National Housing Act (12 U.S.C. 1711) is amended by adding at the end the following:

`(h) In determining whether there is a surplus for distribution to mortgagors under this section, the Secretary shall take into account the actuari al status of the entire Fund.'.

Subtitle C--Mortgage Assignments

SEC. 2201. AMENDMENT TO SECTION 221(g)(4) OF THE NATIONAL HOUSING ACT .

Section 221(g)(4) of the National Housing Act (12 U.S.C. 1715l) is amended by adding after subparagraph (B) the following:

`(C)(i) In lieu of accepting assignment of the original cre dit instrument and the mortgage securing the same under subparagraph (A) in exch ange for receipt of debentures, the Secretary shall arrange for the sale of the beneficial interests in the mortgage loan through an auction and sale of the (I) mortgage loans, or (II) participation certificates, or other mortgage-backed ob ligations in a form acceptable to the Secretary (herein referred to as `particip ating certificates', unless the mortgagee can demonstrate that the auction and s ale is less economically advantageous to it than the receipt of debentures. The Secretary shall arrange the auction and sale at a price, to be paid to the mortg agee, of par plus accrued interest to the date of sale. The sale price would als o include the right to a subsidy payment described in subsection (c).
< /ul>

`(ii)(I) The Secretary shall conduct a public auction to de termine the lowest interest rate necessary to accomplish a sale of the beneficia l interests in the original credit instrument and mortgage securing such a credi t instrument.

`(II) A mortgagee who elects to assign his mortgage must pr ovide the Secretary and persons bidding at the auction a description of the char acteristics of the original credit instrument and mortgage securing the original credit instrument to include, but not be limited to: principal mortgage balance ; original stated interest rate; service fees; real estate and tenant characteri stics; the level and duration of applicable Federal subsidies; and any other inf ormation determined by the Secretary to be appropriate. The Secretary shall also provide the status of this property with respect to provisions in the Emergency Low Income Housing Preservation Act of 1987 or any subsequent Act with respect to eligibility to prepay mortgage, whether the owner has filed an Intent to Prep ay or a Plan of Action under the Emergency Low Income Housing Preservation Act o f 1987 or under any subsequent Act; and the details with respect to incentives p rovided in the Emergency Low Income Housing Preservation Act of 1987 or under an y subsequent Act in lieu of exercising prepayment rights.

`(III) The Secretary shall, upon receipt of the information in subclause (II), promptly advertise for an auction and publish such mortgage descriptions in advance of the auction. For administrative simplicity, the Secre tary may wait up to 6 months to conduct the auction, but under no circumstances may the Secretary conduct an auction before 2 months after receiving the mortgag ee's written notice of intent to assign its mortgage to the Secretary.

`(IV) The lowest interest rate bid for such purchase by a b idder determined by the Secretary to be acceptable shall be accepted by the Secr etary and published in the Federal Register. Settlement for the sale of the cred it instrument and the mortgage underlying the credit instrument shall occur with in 30 business days of the date winning bidders are selected in the auction.

`(V) If no bids are received or if the bids that are receiv ed are not acceptable to the Secretary, the mortgage shall retain all rights und er this section to assign the mortgage loan to the Secretary.

`(iii) As part of the auction process, the Secretary shall agree to provide a monthly interest subsidy payment from the General Insurance F und to the holder of the original credit instrument and the mortgage securing su ch a credit instrument (and its assigns who are approved mortgagees). The subsid y payment shall be paid on the first day of each month in an amount equal to the difference between the stated interest due on the mortgage loan and the lowest interest rate necessary to accomplish a sale of the Participation Certificates f or the then unpaid principal balance plus accrued interest on the mortgage loan. Each interest subsidy payment shall be treated by the holder of the mortgage as interest paid on the mortgage. Such interest subsidy payment shall be provided until the earlier of--

`(I) the maturity date of the loan;

`(II) prepayment of the mortgage loan in accordance wit h the Emergency Low Income Housing Preservation Act of 1987 or any subsequent Ac t, where applicable; or

`(III) default and full payment of insurance benefits o n the mortgage loan by the Federal Housing Administration.

`(iv) The Secretary shall require that the loans presented for assignment be auctioned with servicing rights as whole loans and as particip ating certificates with servicing retained by the current servicer, except that the Secretary may determine if the inclusion of servicing rights in the sale wil l prove beneficial to the financial interests of the Federal Government.

`(v) To the extent practicable, the Secretary shall encoura ge State Housing Finance Agencies, nonprofit organizations, and organizations re presenting the tenants of the property for which the mortgage is being sold, or some other qualified mortgagee participating in a Plan of Action described in th e Emergency Low Income Housing Preservation Act of 1987 or subsequent Act to par ticipate fully in the auction and subsidy mechanism, described in clauses (ii) a nd (iii).

`(vi) The Secretary shall implement the requirements impose d by this subparagraph within 30 days from the date of enactment and not be subj ect to the requirement of prior issuance of regulations in the Federal Register. The Secretary shall issue regulations implementing this section within 6 months of enactment.

`(vii) Nothing in this subparagraph shall diminish or impai r the low income use restrictions applicable to the project under the original r egulatory agreement or the revised agreement entered into pursuant to the Emerge ncy Low Income Housing Preservation Act of 1987 or subsequent Act, if any, or ot her agreements for the provision of Federal assistance to the housing or its ten ants.

`(viii) The provisions of this subparagraph expire effectiv e October 1, 1995. Not later than January 31 of each year, the Secretary shall t ransmit to this Congress a report that includes: the number of mortgages auction ed and sold and their value, the amount of subsidies committed to this program, the number of mortgages transferred to preferred mortgagees, the ability of the Secretary to coordinate this program with the incentives provided under the Emer gency Low Income Housing Preservation Act of 1987 or subsequent Act, and the cos ts and benefits derived from this program for the Federal Government.'.

Subtitle D--Crime and Flood Insurance Programs

SEC. 2301. CRIME INSURANCE PROGRAM.

(a) EXTENSION OF GENERAL AUTHORITY- Section 1201(b) of the National Housing Act (12 U.S.C. 1749bbb(b)) is amended by striking `September 30, 1991' in the matter preceding paragraph (1) and inserting `September 30, 1995'.
(b) CONTINUATION OF EXISTING CONTRACTS- Section 1201(b)(1) of the N ational Housing Act (12 U.S.C. 1749bbb(b)(1)) is amended by striking `September 30, 1992' and inserting `September 30, 1996'.

(c) EXTENSION OF LIMITATION ON PREMIUMS- Section 542(c) of the Hous ing and Community Development Act of 1987 (12 U.S.C. 1749bbb-10c note) is amende d by striking `September 30, 1991' and inserting `September 30, 1995'.

SEC. 2302. FLOOD INSURANCE PROGRAM.

(a) EXTENSION OF GENERAL AUTHORITY- Section 1319 of the National Fl ood Insurance Act of 1968 (42 U.S.C. 4026) is amended by striking `September 30, 1991' and inserting `September 30, 1995'.

(b) EXTENSION OF EMERGENCY PROGRAM- Section 1336(a) of the National Flood Insurance Act of 1968 (42 U.S.C. 4056(a)) is amended by striking `Septemb er 30, 1991' and inserting `September 30, 1995'.

(c) EXTENSION OF LIMITATION ON PREMIUMS- Section 541(d) of the Hous ing and Community Development Act of 1987 (42 U.S.C. 4015 note) is amended by st riking `September 30, 1991' and inserting `September 30, 1995'.

(d) EXTENSION OF EROSION PROVISIONS- Section 1306(c)(7) of the Nati onal Flood Insurance Act of 1968 (42 U.S.C. 4013(c)(7)) is amended by striking ` September 30, 1991' and inserting `September 30, 1995'.

(e) INCLUSION OF COSTS IN PREMIUMS-

(1) ESTIMATES OF PREMIUM RATES- Section 1307(a) of the National Flood Insurance Act of 1968 (42 U.S.C. 4014(a)) is amended--

(A) in paragraph (1)(B)(i), by striking `and' at the end;

(B) in paragraph (1)(B)(ii), by inserting `and' after the c omma at the end;

(C) in paragraph (1)(B), by inserting at the end the follow ing new clause:

`(iii) any remaining administrative expenses incurred i n carrying out the flood insurance and floodplain management programs (including the costs of mapping activities under section 1360) not included under clause ( ii), which shall be recovered by a fee charged to policyholders and such fee sha ll not be subject to any agents' commission, company's expense allowances, or St ate or local premium taxes,'; and

(D) in paragraph (2), by inserting after `title' the follow ing: `, and which, together with a fee charged to policyholders that shall not b e not subject to any agents' commission, company expenses allowances, or State o r local premium taxes, shall include any administrative expenses incurred in car rying out the flood insurance and floodplain management programs (including the costs of mapping activities under section 1360)'.

(2) ESTABLISHMENT OF CHARGEABLE PREMIUM RATES- Section 1308 of the National Flood Insurance Act of 1968 (42 U.S.C. 4015) is amended--

(A) in subsection (b)--

(i) by striking `and' at the end of paragraph (2);

(ii) by redesignating paragraph (3) as paragraph (4); a nd

(iii) by inserting after paragraph (2), the following n ew paragraph:

`(3) adequate, together with the fee under paragraph (1)(B)(iii ) or (2) of section 1307(a), to provide for any administrative expenses of the f lood insurance and floodplain management programs (including the costs of mappin g activities under section 1360), and'; and

(B) by striking subsection (d) and inserting the following new subsection:

`(d) With respect to any chargeable premium rate prescribed under t his section, a sum equal to the portion of the rate that covers any administrati ve expenses of carrying out the flood insurance and floodplain management progra ms which have been estimated under paragraphs (1)(B)(ii) and (1)(B)(iii) of sect ion 1307(a) or paragraph (2) of such section (including the fees under such para graphs), shall be paid to the Director. The Director shall deposit the sum in th e National Flood Insurance Fund established under section 1310.'.

(3) NATIONAL FLOOD INSURANCE FUND- Section 1310(a)(4) of the Na tional Flood Insurance Act of 1968 (42 U.S.C. 4017(a)(4)) is amended to read as follows:

`(4) to the extent approved in appropriations Acts, to pay any administrative expenses of the flood insurance and floodplain management program s (including the costs of mapping activities under section 1360); and'.

(4) ADMINISTRATIVE EXPENSES- Section 1375 of the National Flood Insurance Act of 1968 (42 U.S.C. 4126) is amended by striking `program' and all that follows and inserting the following: `and floodplain management programs a uthorized under this title may be paid with amounts from the National Flood Insu rance Fund (as provided under section 1310(a)(4)), subject to approval in approp riations Acts.'.

(5) EXCEPTION TO LIMITATION ON PREMIUM INCREASES- Notwithstandi ng section 541(d) of the Housing and Community Development Act of 1987 (42 U.S.C . 4015 note) (as amended by this section), the premium rates charged for flood i nsurance under any program established pursuant to the National Flood Insurance Act of 1968 may be increased by more than 10 percent during fiscal year 1991, ex cept that any increase in such rates not resulting from the inclusion in chargea ble premium rates of administrative expenses of the flood insurance and floodpla in management programs (pursuant to the amendments made by this subsection) may not exceed 10 percent.

TITLE III--COMMERCE, SCIENCE, AND TRANSPORTATION

Subtitle A--User Fees

SEC. 3001. COAST GUARD USER FEES.

(a) IN GENERAL- Notwithstanding the provisions of section 2110 of t itle 46, United States Code, the Secretary of the department in which the Coast Guard is operating (hereinafter in this section referred to as the `Secretary') shall establish and implement a system for the collection, commencing October 1, 1990, of $200,000,000 for each of the fiscal years 1991 through 1995, plus an a mount sufficient to compensate for inflation for that period, in receipts from p ayments by users of direct or indirect services provided by the Coast Guard. Amo unts received by the United States Government under this section shall be deposi ted into the general fund of the Treasury as offsetting receipts of the departme nt in which the Coast Guard is operating and ascribed to Coast Guard activities.

(b) APPLICATION- Any fees for indirect services established under t his section shall apply only to vessels operating in navigable waters where the Coast Guard has an established presence.

(c) CARGO PREFERENCE USER FEES- (1) No user fee shall be collected pursuant to subsection (a) unless the Secretary has first established and implem ented a system for the collection, for each of the fiscal years 1991 through 199 5, plus an amount sufficient to compensate for inflation for that period, of use r fees on United States-flag commercial vessels which win cargo preference shipm ent contracts pursuant to section 901(b) of the Merchant Marine Act, 1936 (46 U. S.C. 1241(b)), section 901b of the Merchant Marine Act, 1936 (46 U.S.C. 1241f), the Joint Resolution entitled `Joint Resolution requiring agricultural or other products to be shipped in vessels of the United States where the Reconstruction Finance Corporation or any other instrumentality of the Government finances the exporting of such products', approved March 26, 1934 (46 U.S.C. 1241-1), or sec tion 2631 of title 10, United States Code.

(2) Each such user fee established pursuant to paragraph (1) shall be an amount equal to 25 percent of the difference between the lowest foreign bi d offered and the bid accepted by the shipping agency. Amounts received by the U nited States Government under this subsection shall be deposited into the genera l fund of the Treasury as offsetting receipts as follows: 20 percent as offsetti ng receipts of the department in which the Coast Guard is operating and ascribed to Coast Guard activities, and 80 percent as offsetting receipts of the origina l shipping Federal agency and ascribed to such agency's activities.

(3) Notwithstanding any other provision of law, in no case shall a cargo preference bid be accepted and contracted for pursuant to any law or provi sion thereof referred to in paragraph (1) of this subsection at over 200 percent the lowest foreign-flag bid.

SEC. 3002. RAILROAD SAFETY USER FEES.

The Federal Railroad Safety Act of 1970 is amended by inserting imm ediately after section 215 (45 U.S.C. 445) the following new section:

`USER FEES

`SEC. 216. (a)(1) The Secretary shall establish a schedule of fees to be assessed to railroads, in reasonable relationship to criteria such as reve nue ton-miles, track miles, passenger miles, revenues, other relevant factors, o r an appropriate combination thereof.

`(2) The Secretary shall establish procedures for the collection of such fees. The Secretary may use the services of any Federal, State, or local a gency or instrumentality to collect such fees, and may reimburse such agency or instrumentality a reasonable amount for such services.

`(3) Fees established under his section shall be assessed to railro ads subject to this title and shall approximate, as provided in subsection (d) o f this section, the costs of administering this title and all other Federal laws relating to railroad safety and railroad noise control.

`(b) The Secretary shall assess and collect fees described in subse ction (a) of this section with respect to each fiscal year before the end of suc h fiscal year.

`(c) All fees collected under this section shall be deposited in th e general fund of the Treasury as offsetting receipts and ascribed to the railro ad safety activities of the Secretary.

`(d) Fees established by the Secretary under subsection (a) of this section shall be assessed after September 30, 1990. Fees assessed in the fiscal year beginning on October 1, 1990, shall total no more than $20,000,000; fees a ssessed in the fiscal year beginning on October 1, 1991, shall total no more tha n $37,000,000; fees assessed in the fiscal year beginning on October 1, 1992, sh all total no more than $37,000,000; fees assessed in the fiscal year beginning o n October 1, 1993, shall total no more than $38,000,000; and fees assessed in th e fiscal year beginning on October 1, 1994, shall total no more than $38,000,000 . Beginning on October 1, 1992, the fees assessed shall at least equal the appro priations made for the activities described in subsection (a)(3) of this section , but at no time shall the aggregate of fees assessed for any fiscal year under this section exceed 105 percent of the aggregate of appropriations made for such fiscal year for activities to be funded by such fees.'.

SEC. 303. UNITED STATES TRAVEL AND TOURISM FACILITATION FEE.

The International Travel Act of 1961 (22 U.S.C. 2121 et seq.) is am ended by adding at the end the following new section:

`SEC. 306. (a) In addition to any other fees authorized by law, the Secretary, on a calendar quarterly basis beginning January 1, 1991, shall charg e and collect from each commercial airline and passenger ship line transporting passengers to the United States, a United States Travel and Tourism Administrati on Faciliation Fee. The Secretary shall charge each commercial airline and passe nger ship line an amount equal to one dollar multipled by the number of nonexclu ded passenger arriving at ports of entry in the customs territory of the United States from foreign countries, possessions, or territories aboard commercial air craft or commercial passenger ships of that airline or passenger ship line durin g that calendar quarter. For purposes of determining the fee amount, the Secreta ry shall exclude passengers--

`(1) who are arriving only for immediate and continuous transmi t through the United States to a destination outside the customs territory of th e United States;

`(2) whose journey originated in Canada, Mexico, a territory or possession of the United States, Saint Pierre, Miquelon, Cuba, the Dominican Re public, Haiti, Bermuda, the Bahamas, Barbados, Jamaica, the Windward and Leeward Islands, Trinidad, Martinique, and other British, French, and Netherlands terri tories or possessions in or bordering on the Caribbean Sea; or

`(3) whose journey originated in the United States and is limit ed to Canada, Mexico, a territory or possession of the United States, Saint Pier re, Miquelon, Cuba, the Dominican Republic, Haiti, Bermuda, the Bahamas, Barbado s, Jamaica, the Windward and Leeward Islands, Trinidad, Martinique, and other Br itish, French, and Netherlands territories or possessions in or bordering on the Caribbean Sea.

`(b) Each commercial airline and passenger ship line shall remit th e fee charged by the Secretary under subsection (a) of this section, in United S tates dollars, no later than 31 days after the close of the calendar quarter of the arrival of the passengers on which the fee is based.

`(c) The Secretary shall deposit the fees received pursuant to subs ection (b) of this section in the general fund of the Treasury as offsetting rec eipts and ascribed to the travel and tourism activities of the Secretary.
`(d) Beginning on October 1, 1992, the aggregate amounts collected for the fee charged under this section shall at least equal the appropriations m ade for the travel and tourism activities of the Secretary under this Act, but a t no time shall the aggregate of amounts collected for any fiscal year under thi s section exceed 105 percent of the aggregate of appropriations made for such fi scal year for activities to be funded by such fees. The formula for determining the fee amount under subsection (a) of this section may be modified by the Secre tary as necessary to comply with the requirements of this section.

`(e) Subsections (a) through (d) of this section shall become effec tive thirty days after the date of enactment of this section: Provided, That no fee shall be charged for any passenger transported pursuant to a docume nt or ticket purchased prior to that date. Subsection (f) of this section shall be effective upon enactment.

`(f) The Secretary may prescribe such rules and regulations as may be necessary to carry out the provisions of this section.'.

SEC. 304. NOAA USER FEES.

Section 409 of the Act of November 17, 1988 (15 U.S.C. 1534), is am ended--

(1) in subsection (a) by striking `archived' and all that follo ws and inserting in lieu thereof `and information and products derived therefrom collected and/or achieved by the National Oceanic and Atmospheric Administratio n.';

(2) in subsection (b)(1)--

(A) by inserting ', information, and products' immediately after `data' the first place it appears;

(B) by striking `data is' and inserting in lieu thereof `da ta, information, and products are';

(3) in subsection (b)(2)--

(A) by inserting ', information, or products' immediately a fter `data' the first place it appears;

(B) by striking `data exchange basis' and inserting in lieu thereof `basis of exchanging such data, information, and products';

(4) by adding at the end of subsection (b) the following new pa ragraph:

`(3) The Secretary shall waive the assessment of the fees authorize d by subsection (a) as necessary to continue to provide weather warnings, watche s, forecasts, and similar products and services essential to the mission of the National Oceanic and Atmospheric Administration.';

(5) by amending paragraph (1) of subsection (d) to read as foll ows:

`(1) The initial schedule of fees established by the National E nvironmental Satellite, Data, and Information Service shall remain in effect for the three-year period beginning on the date that the fees under that schedule t ake effect.';

(6) in subsections (e) and (f)(1), by inserting `by the Nationa l Environmental Satellite, Data, and Information Service' immediately after `und er this section' each place it appears; and

(7) in subsection (g), by inserting immediately before the peri od at the end the following: '; including the authority of the Secretary pursuan t to section 1307 of title 44, United States Code.'.

Subtitle B--Airport Capacity

PART 1--SHORT TITLE; FINDINGS

SEC. 3101. SHORT TITLE.

This subtitle may be cited as the `Airport Capacity Act of 1990'.

SEC. 3102. FINDINGS.

The Congress finds that--

(1) aviation noise management is crucial to the continued incre ase in airport capacity;

(2) community noise concerns have led to uncoordinated and inco nsistent restrictions on aviation which could impede the national air transporta tion system;

(3) a noise policy must be implemented at the national level;

(4) local interest in aviation noise management shall be consid ered in determining the national interest;

(5) community concerns can be alleviated through the technology aircraft, combined with the use of revenues, including those available from pas senger facility charges, for noise management;

(6) federally controlled revenues can help resolve noise proble ms and carry with them a responsibility to the national airport system;

(7) a precondition to the establishment or collection of a pass enger facility charge shall be the establishment by the Secretary of Transportat ion of a national noise policy;

(8) revenues derived from a passenger facility charge may be ap plied to noise management and increased airport capacity;

(9) provisions of subpart S of part 93 of title 14, Code of Fed eral Regulations (known as the `buy-sell rule'), which allow a public right to b e used as a private asset, not only restrict competition at the four airports wh ose use is controlled through slots but also can impede competition in air trans portation throughout the northeastern and midwestern United States;

(10) passengers pay higher fares at slot controlled airports th an at other airports;

(11) increasing the number of slots at high density traffic air ports will make it easier for carriers not already engaged in regular operations at those airports to achieve regular operations; and

(12) improvements in the air traffic control system since the i nitiation of slot controls, including new technology and new methods of regulati ng air traffic, necessitate a complete review of the practice of using slots to control access to high density traffic airports.

CHAPTER 2--AUTHORIZATION OF APPROPRIATIONS

SEC. 323. FAA FACILITIES AND EQUIPMENT.

That (a) section 506(a)(1) of the Airport and Airway Improvement Ac t of 1982 (49 App. U.S.C. 2205(a)(1) is amended--

(A) by striking `and' immediately after `October 1, 1989,'; and

(B) by inserting immediately before the period at the end of the first sentence the following: `$14,625,200,000 for fiscal years ending be fore October 1, 1991, and $17,625,200,000 for fiscal years ending before October 1, 1992'.

SEC. 324. FAA RESEARCH, ENGINEERING AND DEVELOPMENT.

(a) Section 506(b)(2) of the Airport and Airway Improvement Act of 1982 (49 App. U.S.C. 2205(b)(2)) is amended--

(1) in subparagraph (B)(vii), by striking `and';

(2) in subparagraph (C), by striking the period at the end and inserting in lieu thereof `; and'; and

(3) by adding at the end of the following new subparagraph:

`(4) for fiscal year 1991, $260,000,000, and for fiscal year 19 92, $260,000,000.'.

(b) Section 506(b)(4) of the Airport and Airway Improvement Act of 1982 (49 App. U.S.C. 2205(b)(4)) is amended--

(1) in subparagraph (A), by striking `and 1990' and inserting i n lieu thereof `1990, 1991, and 1992'; and

(2) in subparagraph (B), by striking `and 1990' and inserting i n lieu thereof `1990, 1991, and 1992'.

(c) Section 506(d) of the Airport and Airway Improvement Act of 19 82 (49 App. U.S.C. 2205(d)) is amended by striking `and 1990' and inserting in l ieu thereof `1990, 1991, and 1992'.

SEC. 325. FAA OPERATIONS.

For necessary expenses of the Administration for which there is no other specific authorization of appropriations, there is authorized to be approp riated $4,088,000,000 for fiscal year 1991 and $4,412,600,000 for fiscal year 19 92.

PART 3--NATIONAL AVIATION NOISE POLICY

SEC. 3201. NATIONAL AVIATION NOISE POLICY.

(a) The Secretary of Transportation shall, by regulation, not later than October 1, 1991, develop and articulate a National Aviation Noise Policy w hich takes into account the Findings and Determinations and provisions of this c hapter.

(b) The National Aviation Noise Policy shall include the establishm ent of a date or dates for the phasing out of Stage 2 technology aircraft as par t of a comprehensive national noise management scheme. The national noise manage ment scheme must include a detailed economic analysis of the impact of any phase out date on competition in the airline industry, and may provide, by regulation, for the allocation and distribution of Stage 2 operating rights during the phas eout period in a manner determined by the Secretary to be economically efficient .

SEC. 3202. NOISE AND ACCESS RESTRICTION REVIEWS.

(a) The National Aviation Noise Policy shall require the establishm ent of a program for adequate public notice and comment opportunities on local a irport noise or access restrictions that first became effective after October 1, 1990, that were negotiated or executed agreements as of October 1, 1990, or whe re the FAA has already formed a working group to examine the noise impact of air traffic control procedure changes.

(b) No airport noise or access restriction on the operation of a St age 3 certificated aircraft, or on a Stage 2 certificated aircraft weighing less than 75,000 pounds, including but not limited to--

(1) any restriction as to noise levels generated on either a si ngle event or cumulative basis;

(2) any limit, direct or indirect, on the total number of State 3 aircraft operations;

(3) any noise budget or noise allocation program which would in clude Stage 3 aircraft;

(4) any restriction imposing limits on hours of operations; and

(5) any other limit on Stage 3 aircraft,

shall be effective unless it has been agreed to by the airport propri etor and all aircraft operators, or until it has been submitted to the Federal A viation Administration pursuant to an airport operator's request for approval an d approved in accordance with the program.

(c) No airport noise or access restriction proposed after October 1 , 1990, could include a restriction on operations with other than Stage 3 aircra ft, unless the airport operator publishes the proposed noise or access restricti on at least 180 days prior to the effective date of the restriction and prepares --

(1) an analysis of the anticipated or actual costs and benefits of the existing or proposed noise regulation;

(2) a description of alternative regulations;

(3) a description of the alternative measures considered not in volving aircraft restrictions, and a comparison of the costs and benefits of suc h alternative measures to the costs and benefits of the proposed noise or access regulation.

(d) The Administrator shall not approve a noise or access restricti on applying to Stage 3 aircraft operations unless the Administrator finds the fo llowing conditions to be supported by substantial evidence:

(1) the proposed restriction is reasonable, nonarbitrary, and n ondiscriminatory;

(2) the proposed restriction does not create an undue burden on interstate or foreign commerce;

(3) the proposed restriction is not inconsistent with maintaini ng the safe and efficient utilization of the navigable airspace;

(4) the proposed restriction does not conflict with any existin g Federal statute or regulation;

(5) there has been an adequate opportunity for public comment w ith respect to the regulation;

(6) consideration of alternative means of minimizing or otherwi se managing noise was reasonable; and

(7) such other factors as the Administrator deems appropriate t o the national air transportation system, as determined by rulemaking.

(e) Sponsors of facilities operating under noise or access restrict ions on Stage 3 operations that first became effective after October 1, 1990, sh all not be eligible for grants authorized by section 505 of the Airport and Airw ay Improvement Act of 1982 (49 U.S.C. App. 2204) 90 days after the date on which the Secretary promulgates the final rule called for under section 331 of this A ct, unless the restrictions have been agreed to by the airport proprietor and ai rport operators or the Administrator has approved the restriction under this tit le, or the restriction has been rescinded.

(f) The Administrator may reevaluate any noise restrictions previou sly approved under subsection (d) upon the request of any aircraft operator able to demonstrate to the satisfaction of the Administrator that there has been a c hange in the noise environment of the affected airport pursuant to the criteria established under subsection (d) and that a review and reevaluation of the benef its and costs of the previously approved noise regulation is therefore justified .

(g) The Administrator shall establish by regulation procedures unde r which the evaluation provided in subsection (f) shall be accomplished. Such ev aluation shall not occur less than two years after a determination under subsect ion (d)(2) has been made.

(h) Except to the extent required by the application of the provisi ons of this section, nothing in this Act shall be deemed to eliminate or superse de existing law with respect to restrictions by local authorities on operation o f Stage 2 aircraft.

SEC. 3203. FEDERAL LIABILITY FOR NOISE DAMAGES.

In the event of a disapproval of a proposed noise or access restric tion, the Federal Government shall assume liability for noise damages only to th e extent that a taking has occurred as a direct result of such disapproval. Acti on for the resolution of such a case shall be brought solely in the United State s Claims Court.

SEC. 3204. PRIVATE RIGHT OF ACTION.

An aircraft operator may commence a civil action against an airport proprietor for the purpose of protecting its rights under this part, in any Uni ted States District Court without regard to citizenship or amount in controversy .

SEC. 3205. LIMITATION ON AIRPORT IMPROVEMENT PROGRAM REVENUE.
Except as specified in subsection (a), under no conditions shall an y airport receive revenues under the provisions of the Airport and Airway Improv ement Act of 1982, or impose or collect a passenger facility charge, unless the Administrator assures that the airport is not imposing any noise or access restr iction not in compliance with this chapter.

SEC. 3206. NOISE COMPATIBILITY PROGRAM.

No proposal for the imposition of a passenger facility charge shall be approved by the Secretary if the airport has not conducted an airport noise compatibility program pursuant to section 104(b) of the Aviation Safety and Nois e Abatement Act of 1979.

PART 4--PASSENGER FACILITY CHARGES

SEC. 3301. DEFINITIONS.

For purposes of this part the following definition applies: The ter m `eligible airport-related project' means--

(1) a project for airport development under the Airport and Air way Improvement Act of 1982;

(2) a project for airport planning under such Act;

(3) a project for terminal development described in section 513 (b) of such Act;

(4) a project for airport noise capability planning under secti on 103(b) of the Aviation Safety and Noise Abatement Act of 1979;

(5) a project to carry out noise compatibility measures which a re eligible for assistance under section 104 of the Aviation Safety and Noise Ab atement Act of 1979 without regard to whether or not a program has been approved for such measures under such section; and

(6) a project for construction of gates and related areas at wh ich passengers are enplaned or deplaned.

SEC. 3302. AUTHORIZATION FOR IMPOSITION.

Section 1113 of the Federal Aviation Act of 1958 (49 U.S.C. App. 15 13) is amended by the addition of a new subsection:

`(e) EXCEPTION FOR IMPOSITION OF PASSENGER FACILITY CHARGES- (1) No twithstanding the above limitations the Secretary of Transportation is hereby au thorized to establish by regulation a program for the imposition of approved pas senger facility charges by any airport proprietor to finance eligible projects.

`(2) Passenger facility charges shall be imposed only as approved b y the Secretary of Transportation and shall be approved only in full dollar amou nts not to exceed three dollars per passenger. They shall remain in effect only during such periods as are necessary to pay for such specific projects as are id entified to support their imposition.

`(3) Passenger facility charges shall be collected only from revenu e passengers originating or terminating their travel at the airport imposing suc h a charge.

`(4) No proposal for the imposition of a passenger facility charge shall be approved by the Secretary of Transportation unless:

`(A) The airport proprietor seeking to impose the passenger fac ility charge certifies, in writing, that airport users and the general public ha ve been provided with: a minimum of seventy-five days advance notice of the prop osal; a full and detailed description of the project intended to be financed; a detailed financial plan for full funding of the specific project; and an opportu nity to meet with the airport proprietor to present their views. On the basis of such advance notification and information the airport proprietor shall solicit the approval or disapproval of the airport users and the general public and shal l advise the Secretary of Transportation of any disagreements with the proposed imposition of a passenger facility charge and the reasons supporting such disagr eement.

`(B) In the event that no disagreement is registered, the Secre tary shall approve the passenger facility charge.

`(C) In the event that disagreement is registered with referenc e to a project otherwise eligible for funding under the provisions of the Airpor t and Airway Improvement Act of 1982, the Secretary shall approve such passenger facility charge unless the Secretary finds by substantial evidence that it woul d not significantly benefit airport security, safety, noise mitigation, or capac ity.

`(D) The Secretary shall establish, by appropriate rule, the pr ocedures under which a disagreement is registered and an appeal heard under subs ection (c).

`(E) In the event that disagreement is registered with referenc e to a project to build airport gates, the Secretary shall not approve such pass enger facility charge unless he finds by substantial evidence that the project i s justified by the need to increase capacity at the facility or facilities affec ted. Under no circumstances shall any gates constructed, improved, or repaired w ith passenger facility charges under this paragraph be subject to long-term leas es for periods exceeding 10 years, or to majority in interest clauses.

`(F) No other projects other than those defined in this title m ay be financed by a passenger facility charge.

`(5) Any proposal to amend a project supported by an approved passe nger facility charge necessitating an upward adjustment of project financing cos ts shall be treated as a new proposal for the imposition of a passenger facility charge and submitted for approval.

`(6) No passenger facility charge shall be approved for imposition prior to the adoption by regulation of a national aviation noise policy in accor dance with the provisions of title III of this Act and, in no event, prior to su ch date at which the uncommitted balance contained in the Airport and Airway Tru st Fund is less than $5,000,000,000.

`(7) Authority for the approval of any new passenger facility charg e, or the modification of any existing charge, shall terminate in the event that appropriations fail to be made to fund at least 90 percent of each amount autho rized for essential air service and the airport improvement program during any f iscal year. Further, all authority to approve any passenger facility charge shal l terminate at any time funds are spent from this Act except as authorized by th is Act.

`(8)(A) Revenues derived from collection of a fee by an airport pro prietor pursuant to this subsection shall not be treated as airport revenues for the purpose of establishing rates, fees and charges pursuant to any contract be tween such airport and an air carrier.

`(B) Except as otherwise provided in subparagraph (C) hereof, such airport shall not include the portion of the capital costs of any project paid f or from such passenger facility charge revenues in the rate base, by means of de preciation, amortization or otherwise, in establishing fees, rates and charges f or air carriers.

`(C) With respect to any project for terminal development, for gate s and related areas, or for any facility which is occupied or utilized by one or more air carriers on an exclusive or preferential basis, the rates, fees and ch arges payable by air carriers which use such facilities shall be no less than th e rates, fees and charges paid by carriers using similar facilities at the ai rport which were not financed with revenues derived from collection of a fe e pursuant to this subsection.

`(D) Except as provided in this subsection, nothing contained in th is Act shall be construed as endorsing or authorizing the unilateral abrogation, abridgement or alteration of any existing contract or lease provision in place at any airport.

`(9) Any passenger facility charge approved for imposition under th is Act shall be collected by the air carrier or its agent selling such transport ation and shall be paid to the airport imposing such a charge in accordance with regulations to be issued by the Secretary of Transportation. Such charge shall be separately identified on any ticket sold for such transportation as a local p assenger facility charge. The Secretary of Transportation shall provide by regul ation for the full and complete compensation of air carriers based upon a unifor m fee which reflects their average cost for their collection and handling costs.

`(10) The Secretary of Transportation shall require that any airpor t imposing a passenger facility charge maintain the funds derived as a result in a separate and identifiable account which, for the purpose of this Act, shall b e subject to the same record, audit and examination requirements imposed upon ai rport improvement program revenues by section 518 of the Airport and Airway Impr ovement Act of 1982.

`(11) No State (or political subdivision thereof, including the Com monwealth of Puerto Rico, the Virgin Islands, Guam, the District of Columbia, th e territories or possessions of the United States or political agencies of two o r more States) shall levy or collect any tax on or with respect to any commercia l aircraft flight, or any activity or service on board such flight, if such flig ht neither takes off nor lands in such state or jurisdiction'.

SEC. 3303. SPONSOR ASSURANCES INCLUDING MINORITY AND SMALL BUSINESS P ARTICIPATION.

Section 511(a) of the Airport and Airway Improvement Act of 1982 (4 9 U.S.C. App. 2210) is amended by after the word title striking `, ' and inserti ng `or passenger facility charge project,'.

SEC. 3304. PREFORMANCE OF CONSTRUCTION WORK INCLUDING MINIMIUM RATES OF WAGES AND VETERANS PREFERENCE.

Section 515 of the Airport and Airway Improvement Act of 1982, (49 U.S.C. App. 2214) is amended--

(1) in subsection (a) by inserting `or passenger facility charg e project' after `title';

(2) in subsection (b) by inserting `or passenger facility charg e project' after `title';

(3) in subsection (c) by inserting `or passenger facility charg e project' after `title';

PART 5--PURCHASE, SALE, LEASE, AND OTHER TRANSFER OF SLOTS DEFINI TIONS

SEC. 3351. As used in this part, the term--

(1) `Administrator' means the Administrator of the Federal Avia tion Administration.

(2) `Air carrier' has the meaning given that term in section 10 1(3) of the Federal Aviation Act of 1958 (49 App. U.S.C. 1301(3)).

(3) `High density traffic airport' means the Kennedy Internatio nal Airport, New York, New York; LaGuardia National Airport, New York, New York; O'Hare International Airport, Chicago, Illinois; or Washington National Airport , Washington, District of Columbia.

(4) `New entrant carrier' means an air carrier, including a com muter operator, that holds fewer than 12 slots at the relevant airport.

(5) `Secretary' means the Secretary of Transportation.

(6) `Slot' means the operational authority to conduct one landi ng or takeoff operation, under instrument flight rules, each day during a specif ic period at an airport.

AIR CARRIER SPECIAL AUTHORIZATIONS

SEC. 3352.(a)(1) Not later than 60 days after the date of enactment of this Act, the Administrator shall by rule create, at Washington National Air port, a pool of 30 daily air carrier special authorizations which shall be sprea d evenly throughout the day from the hour 0700 to the hour 2200 and shall be ava ilable only to air carriers that--

(A) will utilize such special authorizations to conduct operati ons with turbojet aircraft or any aircraft having a certificate maximum seating capacity of 75 or more; and

(B) hold fewer than 12 existing slots at Washington National Ai rport.

(2) Such special authorizations shall be created and allocated in s uch a manner that the actual number of daily operations does not exceed the tota l number of authorized daily operations at Washington National Airport as provid ed in subpart K of part 93 of title 14, Code of Federal Regulations.

(3) Such special authorizations shall be allocated by lottery and i n such a manner that, to the maximum extent practicable, all such air carriers h ave an equal number of slots and special authorizations overall at Washington Na tional Airport. No such air carrier shall receive a special authorization under this subsection which gives that carrier more than 12 slots and special authoriz ations overall at Washington National Airport.

(4) If such special authorizations remain unused after such air car riers have had an opportunity to obtain them, the remaining authorizations may o nly be made available to air carriers that have fewer than 12 slots at Washingto n National Airport.

(5) Each such special authorization shall be public property and it s use shall represent a nonpermanent operating privilege within the exclusive co ntrol and jurisdiction of the Secretary and the Administrator. Any such privileg e may be withdrawn, recalled, or reallocated by the Secretary for reasons of avi ation safety, airspace efficiency, the enhancement of competition in air transpo rtation, or any other matter in the public interest and in accordance with the p ublic convenience and necessity.

(6) If the holder of an air carrier special authorization fails to initiate use of the authorization within 60 days after receiving the authorizati on or thereafter fails to use the authorization in accordance with rules for use of existing air carrier slots, the authorization shall be withdrawn and, if app ropriate, be reallocated to another air carrier as provided in this subsection.

(b)(1) Not later than 60 days after the date of enactment of this A ct, the Administrator shall by rule create, at La Guardia National Airport, a po ol of 30 daily air carrier special authorizations which shall be spread evenly t hroughout the day and shall be available only to air carriers that--

(A) will utilize such special authorizations to conduct operati ons with turbojet aircraft or any aircraft having a certificate maximum seating capacity of 75 or more; and

(B) hold fewer than 12 existing slots at La Guardia National Ai rport.

(2) Such special authorizations shall be allocated by lottery and i n such a manner that, to the maximum extent practicable, all such air carriers h ave an equal number of slots and special authorizations overall at La Guardia Na tional Airport. No such air carrier shall receive a special authorization under this subsection which gives that carrier more than 12 slots and special authoriz ations overall at La Guardia National Airport.

(3) If such special authorizations remain unused after such air car riers have had an opportunity to obtain them, the remaining authorizations may o nly be made available to air carriers that have fewer than 12 slots at La Guardi a National Airport.

(4) Each such special authorization shall be public property and it s use shall represent a nonpermanent operating privilege within the exclusive co ntrol and jurisdiction of the Secretary and the Administrator. Any such privileg e may be withdrawn, recalled, or reallocated by the Secretary for reasons of avi ation safety, airspace efficiency, the enhancement of competition in air transpo rtation, or any other matter in the public interest and in accordance with the p ublic convenience and necessity.

(5) If the holder of an air carrier special authorization fails to initiate use of the authorization within 60 days after receiving the authorizati on or thereafter fails to use the authorization in accordance with rules for use of existing air carrier slots, the authorization shall be withdrawn and, if app ropriate, be reallocated to another air carrier as provided in this subsection.

HIGH DENSITY TRAFFIC AIRPORT RULES

SEC. 3353. (a)(1) On January 1, 1991, the Administrator shall initi ate a review of the provisions of subparts K and S of part 93 of title 14, Code of Federal Regulations. The review shall evaluate the impact of such provisions on aviation safety and ground congestion at each of the high density traffic air ports.

(2) Not later than January 1, 1992, the Administrator shall submit a report to the Committee on Commerce, Science, and Transportation of the Senate and the Committee on Public Works and Transportation of the House of Representa tives regarding the findings of the review initiated under paragraph (1) and any recommendations to be taken in light of those findings.

(b)(1) On January 1, 1991, the Secretary shall initiate a review o f the provisions of subparts K and S of part 93 of title 14, Code of Federal Reg ulations. The review shall evaluate--

(A) the impact of such provisions on airline competition and ho w such provisions have facilitated, and continue to facilitate, new entry at suc h airports; and

(B) methods by which the public can benefit financially from th e provision of slots to carriers and how much revenue or other financial benefit can be generated by each such method.

(2) Not later than January 1, 1992, the Secretary shall submit a re port to the Committee on Commerce, Science, and Transportation of the Senate and the Committee on Public Works and Transportation of the House of Representative s regarding the findings of the review initiated under paragraph (1) and any rec ommendations to be taken in light of those findings.

PART 6--UNIVERSITY AIR TRANSPORTATION CENTERS

SEC. 3401. (a) UNIVERSITY AIR TRANSPORTATION CENTERS-

(1) GRANTS FOR ESTABLISHMENT AND OPERATION- The Administrator o f the Federal Aviation Administration (hereinafter referred to as the `Administr ator') is authorized to make grants to one or more nonprofit institutions of hig her learning to establish and operate one university air transportation center i n each of the ten Federal regions which comprise the Standard Federal Regional B oundary System.

(2) RESPONSIBILITIES- The responsibilities of each university a ir transportation center established under this subsection shall include, but no t be limited to, the conduct of research concerning airspace and airport plannin g and design, airport capacity enhancement techniques, human performance in the air transportation environment, aviation safety and security, the supply of trai ned air transportation personnel including pilots and mechanics, and other aviat ion issues pertinent to developing and maintaining a safe and efficient air tran sportation system, and the interpretation, publication, and dissemination of the results of such research.

(3) APPLICATION- Any nonprofit institution of higher learning i nterested in receiving a grant under this subsection shall submit to the Adminis trator an application in such form and containing such information as the Admini strator may require by regulation.

(4) SELECTION CRITERIA- The Administrator shall select recipien ts of grants under this subsection on the basis of the following criteria:< /ul>

(A) The extent of which the needs of the State in which the applicant is located are representative of the needs of the Federal region for improved air transportation services and facilities.

(B) The demonstrated research and extension resources avail able to the applicant for carrying out this subsection.

(C) The capability of the applicant to provide leadership i n making national and regional contributions to the solution of both long-range and immediate air transportation problems.

(D) The extent to which the applicant has an established ai r transportation program.

(E) The demonstrated ability of the applicant to disseminat e results of air transportation research and educational programs through a stat ewide or regionwide continuing education program.

(G) The projects which the applicant proposes to carry out under the grant.

(5) MAINTENANCE OF EFFORT- No grant may be made under this sect ion in any fiscal year unless the recipient of such grant enters into such agree ments with the Administrator as the Administrator may require to ensure that suc h recipient will maintain its aggregate expenditures from all other sources for establishing and operating a university air transportation center and related re search activities at or above the average level of such expenditures in its 2 fi scal years preceding the date of enactment of this Act.

(6) FEDERAL SHARE- The Federal share of a grant under this subs ection shall be 50 percent of the costs of establishing and operating the univer sity air transportation center and related research activities carried out by th e grant recipient.

(7) Research advisory committee-

(A) Section 312(f)(2) of the Federal Aviation Act of 1958 ( 49 App. U.S.C. 1353(f)(2) is amended by adding at the end of the following new s entence: `In addition, the committee shall coordinate the research and training to be carried out by the university air transportation centers established under the Airport Capacity Act of 1990, disseminate the results of such research, act as a clearinghouse between such centers and the air transportation industry, an d review and evaluate programs carried out by such centers.'.

(B) Section 312(f)(3) of the Federal Aviation Act of 1958 ( 49 App. U.S.C. 1353(f)(3) is amended by striking `20' and inserting in lieu ther eof `30'; and by striking the last sentence and inserting in lieu thereof the fo llowing: `The Administrator in appointing the members of the committee shall ens ure that the university air transportation centers, universities, corporations, associations, consumers, and other government agencies are represented.'.

(b) AUTHORITY- Section 312(c) of the Federal Aviation Act of 1958 ( 49 App. U.S.C. 1353(c)) is amended by inserting immediately after the third sent ence the following: `The Administrator shall undertake or supervise research pro grams concerning airspace and airport planning and design, airport capacity enha ncement techniques, human performance in the air transportation environment, avi ation safety and security, the supply of trained air transportation personnel in cluding pilots and mechanics, and other aviation issues pertinent to developing and maintaining a safe and efficient air transportation system.'.

PART 7--MISCELLANEOUS

SEC. 3451. SEVERABILITY.

If any provision of this Act (including an amendment made by this A ct), or the application thereof to any person or circumstance, is held invalid, the remainder of this Act and the application of such provision to other persons or circumstances shall not be affected thereby.

SEC. 3452. AUXILIARY FLIGHT SERVICE STATION PROGRAM.

(a) GENERAL RULE- The Secretary of Transportation shall develop and implement a system of manned auxiliary flight service stations. The auxiliary f light service stations shall supplement the services of the planned consolidatio n to 61 automated flight service stations under the flight service station moder nization program. Auxiliary flight service stations shall be located in areas of unique weather or operational conditions which are critical to the safety of fl ight.

(b) REPORT TO CONGRESS- Not later than 180 days after the date of t he enactment of this Act, the Secretary of Transportation shall report to Congre ss with the plan and schedule for implementation of this section.

SEC. 3453. MILITARY AIRPORT PROGRAM.

(a) DECLARATION OF POLICY- Section 502(a) of the Airport and Airway Improvement Act of 1982 (49 U.S.C. App. 2201(a) is further amended--

(1) by striking `and' at the end of paragraph (12);

(2) by striking the period at the end of paragraph (13) and ins erting `; and'; and

(3) by adding at the end the following:

`(14) special emphasis should be placed on the conversion of ap propriate former military air bases to civil use and on the identification and i mprovement of additional joint-use facilities.'.

(b) SET-ASIDE--Section 508(d) of such Act (49 U.S.C. App. 2204(d) i s amended by striking paragraph (5) and inserting the following:

`(5) MILITARY AIRPORT SET-ASIDE--Not less than one-half of one percent of the funds made available under section 505 in each of fiscal years 19 91 and 1992 shall be distributed during such fiscal year to sponsors of current or former military airports designated by the Secretary under subsection (f) of this section for the purpose of developing current and former military airports to improve the capacity of the national air transportation system.

`(6) REALLOCATION- If the Secretary determines that he will not be able to distribute the amount of funds required to be distributed under para graph (1), (2), (3), (4), or (5) of this subsection for any fiscal year because the number of qualified applications submitted in compliance with this title is insufficient to meet such amount, the portion of such amount the Secretary deter mines will not be distributed shall be available for obligation during such fisc al year for other airports and for other purposes authorized by section 505 of t his title.'.

(c) DESIGNATION OF FORMER MILITARY AIRPORTS- Section 508 of such Ac t is further amended by adding at the end the following new subsection:

`(f) Designation of Current or Former Military Airports-

`(1) DESIGNATION- The Secretary shall designate not more than 5 current or former military airports for participation in the grant program esta blished under subsection (d)(5) and this subsection. At least 2 such airports sh all be designated within 6 months after the date of the enactment of this subsec tion and the remaining airports shall be designated for participation no later t han September 30, 1992.

`(2) SURVEY- The Secretary shall conduct a survey of current an d former military airports to identify which ones have the greatest potential to improve the capacity of the national air transportation system. The survey shal l also identify the capital development needs of such airports in order to make them part of the national air transportation system and shall identify which cap ital development needs are eligible for grants under section 505. The survey sha ll be completed by September 30, 1991.

`(3) LIMITATION- In selecting airports for participation in the program established under subsection (d)(5) and this subsection and in conducti ng the survey under paragraph (2), the Secretary shall consider only those curre nt or former military airports whose conversion in whole or in part to civilian commercial or reliever airport as part of the national air transportation system would enhance airport and air traffic control system capacity in major metropol itan areas and reduce current and projected flight delays.

`(4) PERIOD OF ELIGIBILITY- An airport designated by the Secret ary under this subsection shall remain eligible to participate in the program un der subsection (d)(5) and this subsection for the 5 fiscal years following such designation. An airport that does not attain a level of enplaned passengers duri ng such 5 fiscal year period which qualifies it as a small hub airport as define d as of January 1, 1990, or reliever airport may be redesignated by the Secretar y for participation in the program for such additional fiscal years as may be de termined by the Secretary.

`(5) ADDITIONAL FUNDING- Notwithstanding the provisions of sect ion 513(b), not to exceed $3,000,000 per airport of the sums to be distributed a t the discretion of the Secretary under section 507(c) for any fiscal year may b e used by the sponsor of a current or former military airport designated by the Secretary under this subsection for construction, improvement, or repair of term inal building facilities, including terminal gates used by aircraft for enplanin g and deplaning revenue passengers. Under no circumstances shall any gates const ructed, improved, or repaired with Federal funding under this paragraph be subje ct to long-term leases for periods exceeding 10 years or majority in interest cl auses.'.

SEC. 3454. EXPANDED EAST COAST PLAN.

(a) ENVIRONMENTAL IMPACT STATEMENT- Not later than 180 days after t he date of the enactment of this Act, the Administrator of the Federal Aviation Administration shall issue an environmental impact statement pursuant to the Nat ional Environmental Policy Act of 1969 on the effects of changes in aircraft pat terns over the State of New Jersey caused by implementation of the Expanded East Coast Plan.

(b) AIR SAFETY INVESTIGATION- Not later than 180 days after the dat e of enactment of this Act, the Administrator shall conduct an investigation to determine the effects on air safety of changes in aircraft flight patterns over the State of New Jersey caused by implementation of the Expanded East Coast Plan .

(c) REPORT TO CONGRESS- Not later than 180 days after the date of e nactment of this Act, the Administrator shall submit to Congress a report contai ning the results of the environmental impact statement and investigation conduct ed pursuant to this section. Such report shall also contain such recommendations for modification of the Expanded East Coast Plan as the Administrator cons iders appropriate or an explanation of why modification of such plan is not ap propriate.

(d) IMPLEMENTATION OF MODIFICATIONS- Not later than 1 year after th e date of the enactment of this Act, the Administrator shall implement modificat ions to the Expanded East Coast Plan recommended under subsection (c).

SEC. 3455. DECLARATION OF POLICY.

Section 502(a) of the Airport and Airway Improvement Act of 1982 (4 9 U.S.C. App. 2201) is amended--

(1) in paragraph (5) by inserting `, including as they may be a pplied between category and class of aircraft' after `discriminatory practices'; and

(2) in paragraph (13) by inserting `and should not unjustly dis criminate between categories and classes of aircraft' after `attempted'.

SEC. 3456. CERTIFICATE TRANSFERS.

Section 401(h) of the Federal Aviation Act of 1958 (49 App. U.S.C. 1371(h)) is amended--

(1) by redesignating the existing text as paragraph (1); and

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

`(2) The Secretary of Transportation shall, upon any such transfer, certify to the Committee on Commerce, Science, and Transportation of the Senate and the Committee on Public Works and Transportation of the House of Representa tives that the transfer is consistent with the public interest.

`(3) For purposes of this subsection, a transfer of a certificate i s consistent with the public interest if that transfer does not adversely affect :

(A) the viability of each of the carriers involved in the trans fer;

(B) competition in the domestic airline industry, and

(C) the trade position of the United States in the internationa l air transportation market.'.

SEC. 3457. SENSITIVE SECURITY INFORMATION.

Section 316(d)(2) of the Federal Aviation Act of 1958 (49 App. 1357 (d)(2)) is amended--

(1) by inserting `security or' immediately before `research and development activities'; and

(2) by striking `subsection' and inserting in lieu thereof `tit le'.

SEC. 3458. REPORTS.

Section 107 (b) and (c) of the Federal Aviation Act of 1958 (49 App . 1307 (b) and (c)) is amended by striking `each April 1 thereafter' each place it appears and inserting in lieu thereof `through April 1, 1990'.

SEC. 3459. ATLANTIC CITY AIRPORT.

Section 312 of the Airport and Airway Safety and Capacity Expansion Act of 1987 (101 Stat. 1528) is repealed.

SEC. 3460. NATURAL DISASTER REGULATION.

The Federal Aviation Act of 1958 is amended by adding immediately a fter section 612 the following:

`SAFETY REGULATION

`SEC. 613. (a) NATIONAL DISASTER AREAS- Prior to the expiration of the 180-day period following the date of the enactment of this section, the Admi nistrator of the Federal Aviation Administration, for safety and humanitarian re asons, shall issue such regulations as may be necessary to prohibit or otherwise restrict aircraft overflights of any inhabited area which has been declared a n ational disaster area in the State of Hawaii.

`(b) EXCEPTIONS- Regulations issued pursuant to subsection (a) shal l not be applicable in the case of aircraft overflights involving an emergency o r a ligitimate scientific purpose.

`(c) STATUS OF STUDIES- On or before the expiration of the 90-day p eriod following the date of the enactment of this section, the Administrator of the Federal Aviation Administration shall report to the Congress on the status o f the studies and reports required by Public Law 100-91 (101 Stat. 674 et seq.). '.

TITLE IV--COMMITTEE ON ENERGY AND NATURAL RESOURCES

Subtitle A--Tongass Timber Reform

SEC. 4001. SHORT TITLE AND DEFINITION.

This subtitle may be cited as the `Tongass Timber Reform Act'.

SEC. 4002. TO REQUIRE ANNUAL APPROPRIATIONS FOR TIMBER MANAGEMENT ON THE TONGASS NATIONAL FOREST.

The Alaska National Interest Lands Conservation Act (Public Law 96- 487, hereinafter in this subtitle referred to as `ANILCA') is hereby amended by deleting section 705(a) (16 U.S.C. 539d(a)) in its entirety and inserting in lie u thereof the following:

`SEC. 705. (a) Subject to appropriations, other applicable law, and the requirements of the National Forest Management Act of 1976 (Public Law 94-5 88), except as provided in subsection (d) of this section, the Secretary shall s eek to provide a supply of timber from the Tongass National Forest which (1) mee ts the annual market demand for timber from such forest and (2) meets the market demand from such forest for each planning cycle.'.

`(d) All provisions of section 6(k) of the National Forest Manageme nt Act of 1976 (16 U.S.C. 1604(k)) shall apply to the Tongass National Forest ex cept that the Secretary need not consider economic factors in the identification of lands not suited for timber production.'.

Subtitle B

SEC. 4110. SHORT TITLE- This subtitle may be cited as the `Uranium Enrichment Act of 1990'.

SEC. 4111. DELETION OF SECTION 161 v- Subsection 161 v. of the Atom ic Energy Act of 1954, as amended, is deleted and the remaining subsections are relettered accordingly.

SEC. 4112. REDIRECTION OF THE URANIUM ENRICHMENT ENTERPRISE OF THE UNITED STATES- The Atomic Energy Act of 1954, as amended (42 U.S.C. 2011-2296) i s further amended by--

a. inserting at the commencement thereof after the words `ATOMI C ENERGY ACT OF 1954':

`TITLE I--ATOMIC ENERGY';

and

b. adding at the end thereof the following:

`TITLE II--UNITED STATES ENRICHMENT CORPORATION

`CHAPTER 21. FINDINGS

`SEC. 1101. FINDINGS- The Congress of the United States finds that:

`a. The enrichment of uranium is essential to the national security and energy security of the United States.

`b. A competitive, well-managed and efficient enrichment enterprise provides important economic benefits to the United States and contributes to a highly favorable foreign trade balance.

`c. A strong United States enrichment enterprise promotes United St ates nonproliferation policies by requiring accountability for United States enr iched uranium.

`d. The operation of uranium enrichment facilities must meet high s tandards for environmental health and safety.

`e. The operation and management of a uranium enrichment enterprise requires a commercial business orientation in order to engender customer suppor t and confidence, and customers, rather than the taxpayers at large, should bear the costs of commercial uranium enrichment services.

`f. The optimal level of expenditures for the uranium enrichment en terprise fluctuates and cannot be accurately predicted or efficiently financed i f subject to annual authorization and appropriation.

`g. Flexibility is essential to adapt business operations to a comp etitive marketplace.

`h. The events of the recent past, including the emergence of forei gn competition, have brought new and unforeseen forces to bear upon the manageme nt and operation of the Government's uranium enrichment enterprise.

`i. The present operation of the uranium enrichment enterprise must be changed so as to further the national interest in the enterprise and respond to the competitive demand placed upon it by market forces, while continuing to meet the paramount objective of ensuring the Nation's common defense and securit y.

`CHAPTER 22. DEFINITIONS, ESTABLISHMENT OF CORPORATION AND PURPOSES

`SEC. 1201. DEFINITIONS- For the purpose of this title:

`a. The term `Secretary' means the Secretary of Energy.

`b. The term `Department' means the Department of Energy of the Uni ted States.

`c. The term `Administrator' means the chief executive officer of t he United States Enrichment Corporation.

`d. The term `Corporation' means the United States Enrichment Corpo ration.

`e. The term `Corporate Board' means the appointed members of the o fficial advisory panel appointed by the President pursuant to section 1503 of th is title.

`f. The term `uranium enrichment' means the separation of uranium o f a given isotopic content into two components, one having a higher percentage o f a fissile isotope and one having a lower percentage.

`g. The term `remedial action' has the same meaning as defined in s ection 120(24) of the Comprehensive Environmental Response, Compensation and Lia bility Act.

`h. The term `decontamination and decommissioning' means those acti vities undertaken to decontaminate and decommission inactive facilities that hav e residual radioactive or mixed radioactive and hazardous chemical contamination .

`SEC. 1202. Establishment of the Corporation:

`a. There is hereby created a body corporate to be known as the `Un ited States Enrichment Corporation'.

`b. The Corporation shall--

`(1) be established as a wholly owned Government corporation su bject to the Government Corporation Control Act, as amended (31 U.S.C. 9101-9109 ), except as otherwise provided herein; and

`(2) be an agency and instrumentality of the United States.

`SEC. 1203. PURPOSES- The Corporation is created for the following purposes--

`(1) to acquire feed material for uranium enrichment, enriched uranium, the Department's uranium previously set aside for commercial purposes, and the Department's uranium enrichment and related facilities;

`(2) to operate, and as required by business conditions, to exp and or construct facilities for uranium enrichment or both;

`(3) to market and sell enriched uranium and uranium enrichment and related services to--

`(A) the Department for governmental purposes; and

`(B) qualified domestic and foreign persons;

`(4) to conduct research and development as required to meet co rporate objectives for the purpose of identifying, evaluating, improving and tes ting processes for uranium enrichment;

`(5) to operate, as a commercial enterprise, on a profitable an d efficient basis; in order to maximize the long term economic value of the Corp oration to the United States Government including the payment of dividends to th e Treasury as a return on the United States Government investment;

`(6) to conduct the business as a self-financing corporation an d eliminate the need for appropriations or other sources of Government financing after enactment of this title;

`(7) to maintain a reliable and economical domestic source of e nrichment services;

`(8) to conduct its activities in a manner consistent with the health and safety of the public;

`(9) to continue to meet the paramount objectives of ensuring t he Nation's common defense and security (including consideration of United State s policies concerning nonproliferation of atomic weapons and other nonpeaceful u ses of atomic energy); and

`(10) to take all other lawful action in furtherance of the for egoing purposes.

`CHAPTER 23. CORPORATE OFFICES

`SEC. 1301. CORPORATE OFFICES- The Corporation shall maintain an of fice for the service of process and papers in the District of Columbia, and shal l be deemed, for purposes of venue in civil actions, to be a resident thereof. T he Corporation may establish offices in such other place or places as it may dee m necessary or appropriate in the conduct of its business.

`CHAPTER 24. POWER AND DUTIES OF THE CORPORATION

`SEC. 1401. SPECIFIC CORPORATE POWERS AND DUTIES- The Corporation--

`a. shall perform uranium enrichment or provide for uranium to be enriched by others at facilities of the Corporation; contracts in existence a s of the date of enactment of this title between the Department and persons unde r contract to perform uranium enrichment and related services at facilities of t he Department shall continue in effect as if the Corporation, rather than the De partment, had executed these contracts;

`b. shall conduct, or provide for the conduct of, research and development activities related to the isotopic separation of uranium as the Corp oration deems necessary or advisable for purposes of maintaining the Corporation as a continuing, commercial enterprise operating on a profitable and efficient basis;

`c. may acquire or distribute enriched uranium, feed material f or uranium enrichment or depleted uranium in transactions with--

`(1) persons licensed under sections 53, 63, 103, or 104 of title I in accordance with the licenses held by such persons;

`(2) persons in accordance with, and within the period of, an agreement for cooperation arranged pursuant to section 123 of title I; or

`(3) as otherwise authorized by law;

`d. may--

`(1) enter into contracts with persons licensed under secti on 53, 63, 103, or 104 of title I for such periods of time as the Corporation ma y deem necessary or desirable, to provide uranium or uranium enrichment and rela ted services; and

`(2) enter into contracts to provide uranium or uranium enr ichment and related services in accordance with, and within the period of, an ag reement for cooperation arranged pursuant to section 123 of title I or as otherw ise authorized by law;

`e. shall sell to the Department as provided in this title, and without regard to section 57 e. of title I or the provisions of section 1535 of title 31, United States Code, such amounts of uranium or uranium enrichment and related services as the Department may determine from time to time are required : (1) for the Department to carry out Presidential direction and authorizations pursuant to section 91 of title I; and (2) for the conduct of other Department p rograms;

`f. may grant licenses, both exclusive and nonexclusive, for th e use of patent and patent applications owned by the Corporation, and establish and collect charges, in the form of royalties or otherwise, for utilization of C orporation-owned facilities, equipment, patents, and technical information of a proprietary nature pertaining to the Corporation's activities.

`SEC. 1402. GENERAL POWERS OF THE CORPORATION- In order to accompli sh the purposes of this title, the Corporation--

`a. shall have perpetual succession unless dissolved by Act of Congress;

`b. may adopt, alter, and use a corporate seal, which shall be judicially noticed;

`c. may sue and be sued in its corporate name and be represente d by its own attorneys in all judicial and administrative proceedings;

`d. may indemnify the Administrator, officers, attorneys, agent s and employees of the Corporation for liabilities and expenses incurred in conn ection with their corporate activities;

`e. may adopt, amend, and repeal bylaws, rules, and regulations governing the manner in which its business may be conducted and the power grant ed to it by law may be exercised and enjoyed;

`f. (1) may acquire, purchase, lease, and hold real and persona l property including patents and proprietary data, as it deems necessary in the transaction of its business, and sell, lease, grant, and dispose of such real an d personal property, as it deems necessary to effectuate the purposes of this ti tle and without regard to the Federal Property and the Administrative Services A ct of 1949, as amended;

`(2) Purchases, contracts for the construction, maintenance, or management and operation of facilities and contracts for supplies or services, except personal services, made by the Corporation shall be made after advertisin g, in such manner and at such times sufficiently in advance of opening bids, as the Corporation shall determine to be adequate to insure notice and an opportuni ty for competition: Provided, That advertising shall not be required wh en the Corporation determines that the making of any such purchase or contract w ithout advertising is necessary in the interest of furthering the purposes of th is title, or that advertising is not reasonably practicable;

`g. with the consent of the agency or government concerned, may utilize or employ the services or personnel of any Federal Government agency, o r any State or local government, or voluntary or uncompensated personnel to perf orm such functions on its behalf as may appear desirable;

`h. may enter into and perform such contracts, leases, cooperat ive agreements, or other transactions as may be necessary in the conduct of its business and on such terms as it may deem appropriate, with any agency or instru mentality of the United States, or with any State, territory or possession, or w ith any political subdivision thereof, or with any person, firm, association, or corporation;

`i. may determine the character of and the necessity for its ob ligations and expenditures and the manner in which they shall be incurred, allow ed, and paid, subject to the provisions of this title and other provisions of la w specifically applicable to wholly owned Government corporations;

`j. notwithstanding any other provision of law, and without nee d for further appropriation, may use monies, unexpended appropriations, revenues and receipts from operations, amounts received from obligations issued and othe r assets of the Corporation in accordance with section 1505, without fiscal year limitation, for the payment of expenses and other obligations incurred by the C orporation in carrying out its functions under, and within the requirements of, this title; and shall not be subject to apportionment under the provisions of su bchapter II of chapter 15 of title 31, United States Code;

`k. may settle and adjust claims held by the Corporation agains t other persons or parties and claims by other persons or parties against the Co rporation;

`l. may exercise, in the name of the United States, the power o f eminent domain for the furtherance of the official purposes of the Corporation ;

`m. shall have the priority of the United States with respect t o the payment of debts out of bankrupt, insolvent, and decedents' estates;< /ul>

`n. may define appropriate information as `Government Commercia l Information' and exempt such information from mandatory release pursuant to se ction 552(b)(3) of title 5, United States Code, when it is determined by the Adm inistrator that such information if publicly released would harm the Corporation 's legitimate commercial interests or those of a third party;

`o. may request, and the Administrator of General Services, whe n requested, shall furnish the Corporation such services as he is authorized to provide agencies of the United States;

`p. may accept gifts or donations of services, or of property, real, personal, mixed, tangible or intangible, in aid of any purposes herein aut horized; and

`q. may execute, in accordance with its bylaws, rules and regul ations, all instruments necessary and appropriate in the exercise of any of its powers.

`r. shall pay any settlement or judgment entered against it fro m the Corporation's own funds and not from the judgment fund (31 U.S.C. 1304). T he provisions of the Federal Tort Claims Act (28 U.S.C. 1346(b) and 2671 et seq. ) shall not apply to any claims arising from the activities of the Corporation a fter the effective date of this title: Provided, That this subsection s hall not apply to liability or claims arising from a nuclear incident, if such i ncident occurs prior to the licensing of the Corporation's existing Gaseous Diff usion Facilities under section 1601 of this title.

`SEC. 1403. Continuation of Contracts, Orders, Proceedings, and Reg ulations:

`a. Except as provided elsewhere in this title, all contracts, agre ements, and leases with the Department, and licenses, and privileges that have b een afforded to the Department prior to the date of the enactment of this title and that relate to uranium enrichment, including all enrichment services contrac ts, power purchase contracts, and the December 18, 1987, settlement agreement wi th the Tennessee Valley Authority regarding payment of capacity charges under th e Department's two power contracts with the Tennessee Valley Authority, shall co ntinue in effect as if the Corporation had executed such contracts, agreements, or leases or had been afforded such licenses and privileges.

`b. As related to the functions vested in the Corporation by this t itle, all orders, determinations, rules, regulations and privileges of the Depar tment shall continue in effect and remain applicable to the Corporation until mo dified, terminated, superseded, set aside or revoked by the Corporation, by any court of competent jurisdiction, or by operation of law unless otherwise specifi cally provided in this title.

`c. Except as provided elsewhere in this title, the transfer of fun ctions related to and vested in the Corporation by this title shall not affect p roceedings judicial or otherwise, relating to such functions which are pending a t the time this title takes effect, and such proceedings shall be continued with the Corporation, as appropriate.

`SEC. 1404. LIABILITIES- Except as provided elsewhere in this title , all liabilities attributable to operation of the uranium enrichment enterprise prior to the date of the enactment of this title shall remain direct liabilitie s of the Government of the United States; with regard to any claim seeking to im pose such liability, section 1403 shall not be applicable and the United States shall be represented by the Department of Justice.

`CHAPTER 25. ORGANIZATION, FINANCE AND MANAGEMENT

`SEC. 1501. Administrator:

`a. The management of the Corporation shall be vested in an Adminis trator who shall be appointed by the President, by and with the advice and conse nt of the Senate, without regard to political affiliation. The Administrator sha ll be a person who, by reason of professional background and experience is speci ally qualified to manage the Corporation: Provided, however, That upon enactment of this title, the President shall appoint in existing officer or empl oyee of the United States to act as Administrator until the office is filled.

`b. The Administrator--

`(1) shall be the chief executive officer of the Corporation an d shall be responsible for the management and direction of the Corporation. The Administrator shall establish the offices, appoint the officers and employees of the Corporation (including attorneys), and define their responsibilities and du ties. The Administrator shall appoint other officers and employees as may be req uired to conduct the Corporation's business;

`(2) shall serve a term of six years but may be reappointed;

`(3) shall, before taking office, take an oath to faithfully di scharge the duties thereof;

`(4) shall have compensation determined by the President based upon the recommendation of the Secretary and the Corporate Board as provided in section 1503(c), except that in the absence of such determination compensation s hall be set at Executive Level I, as prescribed in section 5312 of title 5, Unit ed States Code;

`(5) shall be a citizen of the United States;

`(6) shall designate an officer of the Corporation who shall be vested with the authority to act in the capacity of the Administrator in the ev ent of absence or incapacity; and

`(7) may be removed from office only by the President and only for neglect of duty or malfeasance in office. The President shall communicate th e reasons for any such removal to both Houses of Congress at least thirty days p rior to the effective date of such removal.

`c. (1) The Secretary shall exercise general supervision over the A dministrator only with respect to the activities of the Corporation involving--

`(A) the Nation's common defense and security; and

`(B) health, safety and the environment.

`(2) The Administrator shall be solely responsible for the exercise of all powers and responsibilities that are committed to the Administrator unde r this title and that are not reserved to the Secretary under paragraph (1), and , notwithstanding the provisions of section 9104(a)(4) of title 31, United State s Code, including the setting of the appropriate amount of, and paying, any divi dend under section 1506(c) and all other fiscal matters.

`SEC. 1502. DELEGATION- The Administrator may delegate to other off icers or employees powers and duties assigned to the Corporation in order to ach ieve the purposes of this title.

`SEC. 1503. CORPORATE BOARD- There is hereby established a Corporat e Board appointed by the President which shall consist of five members, one of w hom shall be designated as chairman. Members of the Corporate Board shall be ind ividuals possessing high integrity, demonstrated accomplishment and broad experi ence in management and shall have strong backgrounds in science, engineering, bu siness or finance. At least one member of the Corporate Board shall be, or previ ously have been, employed on a full-time basis in managing an electric utility:

`a. (1) The specific responsibilities of the Corporate Board shall be to--

`(A) review the Corporation's policies and performance and advi se the Administrator and the Secretary on these matters; and

`(B) advise the Administrator and the Secretary on any other su ch matters concerning the Corporation as may be referred to the Corporate Board.

`(2) The Board shall have the right to recommend removal of the Adm inistrator. In the event such recommendation is made, it shall be transmitted to the President by the Secretary, together with the Secretary's own recommendatio n on removal of the Administrator.

`b. Members of the Board shall be provided access to all significan t reports, memoranda, or other written communications generated or received by t he Corporation. At the request of the Board, the Corporation shall make availabl e to the Board all financial records, reports, files, papers, and memoranda of, or in use by, the Corporation.

`c. When appropriate, the Corporate Board may make recommendations to the Secretary concerning the compensation to be received by the Administrator and up to ten officers of the Corporation who may receive compensation in exces s of Executive Level II as provided in section 1504(a). The Secretary shall tran smit such recommendations to the President together with the Secretary's own rec ommendations concerning compensation. In the event that less than three members of the Corporate Board are in office, recommendations concerning compensation ma y be made by the Secretary alone. The President shall have the power to enter in to binding agreements concerning compensation to be received by the Administrato r during his term of office and by the ten officers described in section 1504(a) during their term of employment, regardless of any recommendations received or not received under this title.

`d. Except for initial appointments, members of the Corporate Board shall serve five-year terms. Each member of the Corporate Board shall be a citi zen of the United States. No more than three members of the Board shall be membe rs of any one political party. Of those first appointed, the chairman shall serv e for the full five-year term; one member shall serve for a term of four years; one shall serve for a term of three years; one shall serve for a term of two yea rs; and one shall serve for a term of one year.

`e. Upon expiration of the initial term, each Corporate Board membe r appointed thereafter shall serve a term of five years. Upon the occurrence of a vacancy on the Board, the President shall appoint an individual to fill such v acancy for the remainder of the applicable term. Upon expiration of a term, a Bo ard member may continue to serve up to a maximum of one year or until a successo r shall have been appointed and assumed office, whichever occurs first.

`f. The members of the Corporate Board in executing their duties sh all be governed by the laws and regulations regarding conflicts of interest, but exempted from other provisions and authority prescribed by the Federal Advisory Committee Act, as amended (5 U.S.C. Appendix 2).

`g. The Corporate Board shall meet at any time pursuant to the call of the Chairman and as provided by the bylaws of the Corporation, but not less than quarterly. The Administrator or his representative shall attend all meeting s of the Corporate Board.

`h. The Corporation shall compensate members of the Corporate Board at a per diem rate equivalent to Executive Level III, as defined in section 531 4 of title 5, United States Code, in addition to reimbursement of reasonable exp enses incurred when engaged in the performance of duties vested in the Corporate Board. Any Corporate Board member who is otherwise a Federal employee shall not be eligible for compensation above reimbursement for reasonable expenses incurr ed while attending official meetings of the Corporation.

`i. (1) The Corporate Board shall report at least annually to the A dministrator on the performance of the Corporation and the issues that, in the o pinion of the Board, require the attention of the Administrator. Any such report shall include such recommendations as the Board finds appropriate. A copy of an y report under this subsection shall be transmitted promptly to the President, t he Secretary, the Committee on Energy and Natural Resources of the Senate and to the Speaker of the House of Representatives.

`(2) Within ninety days after the receipt of any report under this subsection the Administrator shall respond in writing to such report and provide an analysis of such recommendations of the Board contained in the report. Such response shall include plans for implementation of each recommendation or a just ification for not implementing such recommendation. A copy of any response under this subsection shall be transmitted promptly to the President, the Secretary, the Committee on Energy and Natural Resources and to the Speaker of the House of Representatives.

`SEC. 1504. EMPLOYEES OF THE CORPORATION- Officers and employees of the Corporation shall be officers and employees of the United States:

`a. The Administrator shall appoint all officers, employees and age nts of the Corporation as are deemed necessary to effect the provisions of this title without regard to any administratively imposed limits on personnel, and an y such officer, employee or agent shall only be subject to the supervision of th e Administrator. The Administrator shall fix all compensation in accordance with the comparable pay provisions of section 5301 of title 5, United States Code, w ith compensation levels not to exceed Executive Level II, as defined in section 5313 of title 5, United States Code: Provided, That the Administrator m ay, upon recommendation by the Secretary and the Corporate Board as provided in section 1503(c) and approval by the President, appoint up to ten officers whose compensation shall not exceed an amount which is 20 per centum less than the com pensation received by the Administrator, but not less than Executive Level II. T he Administrator shall define the duties of all officers and employees and provi de a system of organization inclusive of a personnel management system to fix re sponsibilities and promote efficiency. The Corporation shall assure that the per sonnel function and organization is consistent with the principles of section 23 01(b) of title 5, United States Code, relating to merit system principles. Offic ers and employees of the Corporation shall be appointed, promoted and assigned o n the basis of merit and fitness, and other personnel actions shall be consisten t with the principles of fairness and due process but without regard to those pr ovisions of title 5 of the United States Code governing appointments and other p ersonnel actions in the competitive service.

`b. Any Federal employee hired before January 1, 1984, who transfer s to the Corporation and who on the day before the date of transfer is subject t o the Federal Civil Service Retirement System (subchapter III of chapter 83 of t itle 5, United States Code) shall remain within the coverage of such system unle ss he or she elects to be subject to the Federal Employees' Retirement System. F or those employees remaining in the Federal Civil Service Retirement System, the Corporation shall withhold pay and shall pay into the Civil Service Retirement and Disability Fund the amounts specified in chapter 83 of title 5, United State s Code. Employment by the Corporation without a break in continuity of service s hall be considered to be employment by the United States Government for purposes of subchapter III of chapter 83 of title 5, United States Code. Any employee of the Corporation who is not within the coverage of the Federal Civil Service Ret irement System shall be subject to the Federal Employees' Retirement System (cha pter 84 of title 5, United States Code). The Corporation shall withhold pay and make such payments as are required under that retirement system. Further:
`(1) Any employee who transfers to the Corporation under this s ection shall not be entitled to lump sum payments for unused annual leave under section 5551 title 5, United States Code, but shall be credited by the Corporati on with the unused annual leave at the time of transfer.

`(2) An employee who does not transfer to the Corporation and w ho does not otherwise remain a Federal employee shall be entitled to all the rig hts and benefits available under Federal law for separated employees, except tha t severance pay shall not be payable to an employee who does not accept an offer of employment from the Corporation of work substantially similar to that perfor med by the employee for the Department.

`c. This section does not affect a right or remedy of an officer, e mployee, or applicant for employment under a law prohibiting discrimination in e mployment in the Government on the basis of race, color, religion, age, sex, nat ional origin, political affiliation, marital status, or handicap conditions.

`d. Officers and employees of the Corporation shall be covered by c hapter 73 of title 5, United States Code, relating to suitability, security and conduct.

`e. Compensation, benefits, and other terms and conditions of emplo yment in effect immediately prior to the effective date of this section, whether provided by statute or by rules and regulations of the Department or the execut ive branch of the Government of the United States shall continue to apply to off icers and employees who transfer to the Corporation from other Federal employmen t until changed by the Corporation in accordance with the provisions of this tit le.

`f. The provisions of sections 3323(a) and 8344 of title 5, United States Code, or any other law prohibiting or limiting the reemployment of retire d officers or employees or the simultaneous receipt of compensation and retired pay or annuities, shall not apply to officers and employees of the Corporation w ho have retired from or ceased previous government service prior to April 28, 19 87.

`SEC. 1505. TRANSFER OF PROPERTY TO THE CORPORATION- In order to en able the Corporation to exercise the powers and duties vested in it by this titl e:

`a. The Secretary, as requested by the Administrator, is authorized and directed to transfer without charge to the Corporation all of the Departmen t's right, title, or interest in and to, real or personal properties owned by th e Department, or by the United States but under control or custody of the Depart ment, which are related to and materially useful in the performance of the funct ions transferred by this title, including but not limited to the following--

`(1) production facilities for uranium enrichment inclusive of real estate, buildings and other improvements at production sites and their rela ted and supporting equipment: Provided, That facilities, real estate, i mprovements and equipment related to the Oak Ridge Gaseous Diffusion Plant in Oa k Ridge, Tennessee, and to the gas centrifuge enrichment program shall not trans fer under this paragraph except for diffusion cascades and related equipment nee ded by the Corporation for replacement parts: Provided further, That an y enrichment facilities retained by the Department shall not be used to enrich u ranium in competition with the Corporation. This paragraph shall not prejudice c onsideration of any site as a candidate site for future expansion or replacement of uranium enrichment capacity;

`(2) at such time subsequent to the year 2000 as the Secretary determines that the Oak Ridge Gaseous Diffusion Plant should be decommissioned o r decontaminated, or both, the Secretary shall convey without charge equipment a nd facilities relating to the Oak Ridge Gaseous Diffusion Plant not transferred in paragraph (1) to the Corporation;

`(3) facilities, equipment, and materials for research and deve lopment activities related to the isotopic separation of uranium by the gaseous diffusion technology;

`(4) the Department's stocks of preproduced enriched uranium, b ut excluding stocks of highly enriched uranium: Provided, That approxim ately two metric tons of the Department's highly enriched uranium shall be loane d to the Corporation as required for working inventory;

`(5) the Department's stocks of feed materials for uranium enri chment except for the quantities allocated to the national defense activities of the Department as of the date of enactment;

`(A) the Department's stockpile of enrichment tails existin g as of the date of enactment, shall remain with the Department; and

`(B) stocks of feed materials which remain the property of the Department under paragraph (5) shall remain in place at the enrichment plant sites. The Corporation shall have access to and use of these feed materials pro vided such quantities as are used are replaced, or credit given, if use by the D epartment is subsequently needed.

`(6) all other facilities, equipment, materials, processes, pat ents, technical information of any kind, contracts, agreements, and leases to th e extent these items concern the Corporation's functions and activities, except those items required for programs and activities of the Department and those ite ms specifically excluded by this subsection.

The transfer authorized by this section is not subject to the require ments of section 120(h) of the Comprehensive Environmental Response, Compensatio n and Liability Act.

`b. The Secretary is authorized and directed to grant to the Corpor ation without charge the Department's rights and access to the Atomic Vapor Lase r Isotope Separation, hereinafter referred to as `AVLIS', technology and to prov ide on a reimbursable basis and at the request of the Corporation, the necessary cooperation and support of the Department to assure the commercial development and deployment of AVLIS or other technologies in a manner consistent with the in tent of this title.

`c. The Secretary is authorized and directed to grant the Corporati on without charge, to the extent necessary or appropriate for the conduct of the Corporation's activities, licenses to practice or have practiced any inventions or discoveries (whether patented or unpatented) together with the right to use or have used any processes and technical information owned or controlled by the Department.

`d. The Secretary is directed, without need of further appropriatio n, to transfer to the Corporation the unexpended balance of appropriations and o ther monies available to the Department (inclusive of funds set aside for accoun ts payable), and accounts receivable which are related to functions and activiti es acquired by the Corporation from the Department pursuant to this title, inclu ding all advance payments.

`e. The President is authorized to provide for the transfer to the Corporation of the use, possession, and control of such other real and personal property of the United States which is reasonably related to the functions perfo rmed by the Corporation. Such transfers may be made by the President without cha rge as he may from time to time deem necessary and proper for achieving the purp oses of this title.

`f. Title to depleted uranium resulting from the enrichment service s provided to the Department by the Corporation shall remain with the Department .

`SEC. 1506. Capital Structure of the Corporation:

`a. Upon commencement of operations of the Corporation, all liabili ties then chargeable to unexpended balances of appropriations transferred under section 1505 shall become liabilities of the Corporation.

`b. (1) The Corporation shall issue capital stock representing an e quity investment equal to the book value of assets transferred to the Corporatio n, as reported in the Uranium Enrichment Annual Report for fiscal year 1987, mod ified to reflect continued depreciation and other usual changes that occur up to date of transfer. The Secretary of the Treasury shall hold such stock for the U nited States: Provided, That all rights and duties pertaining to manage ment of the Corporation shall remain vested in the Administrator as specified in section 1501.

`(2) The capital stock of the Corporation shall not be sold, transf erred, or conveyed by the United States unless such disposition is specifically authorized by Federal law enacted after enactment of this title.

`c. The Corporation shall pay into miscellaneous receipts of the Tr easury of the United States or such other fund as provided by law, dividends on the capital stock, out of earnings of the Corporation, as a return on the invest ment represented by such stock. The Corporation shall pay such dividends out of earnings, unless there is an overriding need to retain these funds in furtheranc e of other corporate functions including but not limited to research and develop ment, capital investments and establishment of cash reserves.

`d. The Corporation shall repay within a twenty-year period the amo unt of $364,000,000 into miscellaneous receipts of the Treasury of the United St ates, or such other fund as provided by law with interest on the unpaid balance from the date of enactment of this title at a rate equal to the average yield on twenty-year Government obligations as determined by the Secretary of the Treasu ry on the date of enactment of this title. The money required to be repaid under this subsection is hereinafter referred to as the `Initial Debt'.

`e. Receipt by the United States of the stock issued by the Corpora tion (including all rights appurtenant thereto) together with repayment of the I nitial Debt and the fees established under section 1701.c shall constitute the s ole recovery by the United States of previously unrecovered costs that have been incurred by the United States of uranium enrichment activities prior to enactme nt of this title.

`SEC. 1507. Borrowing:

`a. (1) The Corporation is authorized to issue and sell bonds, note s, and other evidences of indebtedness (hereinafter collectively referred to as `bonds') in an amount not exceeding $2,500,000,000 outstanding at any one time t o assist in financing its activities and to refund such bonds. The principal of and interest on said bonds shall be payable from revenues of the Corporation.

`(2) Notwithstanding any other provision of law, the Corporation ma y pledge and use its revenues for payment of the principal of and interest on sa id bonds, for purchase or redemption thereof, and for other purposes incidental thereto, including creation of reserve funds and other funds which may be simila rly pledged and used, to such extent and in such manner as it may deem necessary or desirable.

`(3) Notwithstanding any other provision of law, the Corporation is authorized to enter into binding convenants with the holders of said bonds--and with the trustee, if any--under any indenture, resolution, or other agreement e ntered into in connection with the issuance thereof with respect to the establis hment of reserve funds and other funds, stipulations concerning the subsequent i ssuance of bonds, and such other matters, not inconsistent with this title, as t he Corporation may deem necessary or desirable to enhance the marketability of s aid bonds.

`(4) Bonds issued by the Corporation hereunder shall not be obligat ions of, nor shall payments of the principal thereof or interest thereon be guar anteed by, the United States.

`b. Bonds issued by the Corporation under this section shall be neg otiable instruments unless otherwise specified therein, shall be in such forms a nd denominations, shall be sold at such times and in such amounts, shall mature at such time or times not more than thirty years from their respective dates, sh all be sold at such prices, shall bear such rates of interest, may be redeemable before maturity at the option of the Corporation in such manner and at such tim es and redemption premiums, may be entitled to such priorities of claim on the C orporation's revenues with respect to principal and interest payments, and shall be subject to such other terms and conditions, as the Corporation may determine : Provided, That at least fifteen days before selling each issue of bon ds hereunder (exclusive of any commitment shorter than one year) the Corporation shall advise the Secretary of the Treasury as to the amount, proposed date of s ale, maturities, terms and conditions and expected rates of interest of the prop osed issue in the fullest detail possible. The Corporation shall not be subject to the provisions of section 9108 of title 31, United States Code. The Corporati on shall be deemed part of an executive department or an independent establishme nt of the United States for purposes of the provisions of section 78c(c) of titl e 15, United States Code.

`c. Bonds issued by the Corporation hereunder shall be lawful inves tments and may be accepted as security for all fiduciary, trust, and public fund s, the investment or deposit of which shall be under the authority or control of any officer or agency of the United States. The Secretary of the Treasury or an y other officer or agency having authority over or control of any such fiduciary , trust, or public funds, may at any time sell any of the bonds of the Corporati on acquired by them under this section: Provided, That the Corporation shall not issue or sell any bonds to the Federal Financing Bank.

`SEC. 1508. PRICING:

`a. For purposes of maximizing the long-term economic value of the Corporation to the United States Government, the Corporation shall establish pri ces for its products, materials and services provided to customers other than th e Department on a basis that will, over the long term, allow it to recover its c osts for providing the products, materials and services; repay the Initial Debt; recover costs of decontamination, decommissioning and remedial action; and atta in the normal business objectives of a profitmaking Corporation.

`b. The Corporation shall establish prices for low assay enrichment services and other products, materials, and services provided the Department on a basis that will allow it to recover its costs on a yearly basis for providing such low assay enrichment services, products, materials, and services, includin g depreciation and the cost of decontamination, decommissioning and remedial act ion, but excluding repayment of the Initial Debt and profit. In establishing suc h prices, the base charge paid by the Department in any given year shall not exc eed the average base charge paid by customers other than the Department: Pro vided, however, That if the imposition of such average base charges as a li mitation on the base charge paid by the Department in a given year does not perm it the Corporation to fully recover its costs for providing such products, mater ials and services to the Department then, in subsequent years, the Corporation s hall include such unrecovered costs in its prices charged the Department. Base c harge shall mean the amount paid by a customer per separative work unit for low assay enrichment services during a given year (exclusive of any credits received under a voluntary overfeeding program), less the portion of such amount which r epresents the cost of decontamination and decommissioning and remedial action. T he average base charge paid by customers other than the Department shall be dete rmined by dividing the estimated total dollar amount of low assay enrichment ser vices sales to customers other than the Department during a given year by the es timated amount of separative work units sold to customers other than the Departm ent during that year. Adjustments between estimated and actual amounts shall be made upon receipt of actual sales data.

`c. The Corporation shall establish prices to the Department for hi gh assay enrichment services on a basis that will allow it to recover its costs, on a yearly basis, for providing the products, materials or services, including depreciation and the costs of decontamination, decommissioning, and remedial ac tion concerning enrichment property, but excluding repayment of the Initial Debt and profit. If the Department does not request any enrichment services in a giv en year, the Department shall reimburse the Corporation for costs required to ma intain the minimum level of operation of the high assay production facility.

`d. (1) In accordance with the cost responsibilities defined in par agraphs (3) and (4), the Corporation beginning in fiscal year 1996 shall recover from its customers other than the Department in the prices and charges establis hed in accordance with subsection (a), amounts that will be sufficient to pay fo r the costs of decommissioning, decontamination and remedial action for the vari ous property of the Corporation, including property transferred under section 15 05(a) at any time. The Corporation shall begin recovering such costs in prices a nd charges to the Department at such time as this title takes effect. Such costs shall be based on the point in time that such decommissioning, decontamination and remedial action are to be undertaken and accomplished: Provided, Th at by the year 2000 the Corporation shall have recovered and deposited in the Ur anium Enrichment Decontamination and Decommissioning Corporate Fund and the Uran ium Enrichment Decontamination and Decommissioning Base Fund 50 per centum of th e estimated total costs of decontamination and decommissioning of all property t ransferred or to be transferred to the Corporation under section 1505, including the Oak Ridge Gaseous Diffusion Plant.

`(2) In order to meet the objective defined in paragraph (1), the C orporation shall periodically estimate the anticipated or actual costs of decomm issioning and decontamination. Such estimates shall reflect any changes in assum ptions or expectations relevant to meeting such objective, including, but not li mited to, any changes in applicable environmental requirements. Such estimates s hall be reviewed at least every two years.

`(3) For purposes of enabling the Corporation to meet the objective defined in paragraph (1) with respect to the Oak Ridge Gaseous Diffusion Plant, the Secretary shall periodically estimate the anticipated costs of decontaminat ion and decommissioning and the time at which such decontamination and decommiss ioning is to be accomplished. Such estimates shall reflect any changes in assump tions or expectations relevant to meeting such objective, including but not limi ted to, any changes in applicable environmental requirements. The Secretary shal l review such estimates every two years and convey this information to the Corpo ration.

`(4) With respect to property that has been used in the production of low-assay separative work,

`(A) The costs of decommissioning, decontamination and remedial action that shall be recoverable from customers or persons other than the Depar tment in prices, charges and fees shall be in the same ratio to the total costs of decommissioning, decontamination and remedial action for the property in ques tion as the production of separative work over the life of such property for com mercial customers bears to the total production of separative work over the life of such property.

`(B) All other costs of decommissioning, decontamination and re medial action for such property shall be recovered in prices and charges to the Department.

`(5) With respect to property that has been used solely in the prod uction of high-assay separative work, all costs of decommissioning, decontaminat ion and remedial action shall be recovered in prices and charges to the Departme nt.

`SEC. 1509. AUDITS- In fiscal years during which an audit is not pe rformed by the Comptroller General in accordance with the provisions of section 9105 of title 31, United States Code, the financial transactions of the Corporat ion shall be audited by an independent firm or firms of nationally recognized ce rtified public accountants who shall prepare such audits using standards appropr iate for commercial corporate transactions. The fiscal year of the Corporation s hall conform to the fiscal year of the United States. The General Accounting Off ice shall review such audits annually, and to the extent necessary, cause there to be a further examination of the Corporation using standards for commercial co rporate transactions. Such audits shall be conducted at the place or places wher e the accounts of the Corporation are established and maintained. All books, fin ancial records, reports, files, papers, memoranda, and other property of, or in use by, the Corporation shall be made available to the person or persons authori zed to conduct audits in accordance with the provisions of this section.
`SEC. 1510. Reports:

`a. The Corporation shall prepare an annual report of its activitie s. This report shall contain--

`(1) a general description of the Corporation's operations;

`(2) a summary of the Corporation's operating and financial per formance, including an explanation of the decision to pay or not pay dividends; and

`(3) copies of audit reports prepared in conformance with secti on 1509 of this title and the provisions of the Government Corporation Control A ct, as amended.

`b. A copy of the annual report shall be provided to the President, the Secretary, the Committee on Energy and Natural Resources of the Senate, and the appropriate committees of the House of Representatives. Such reports shall be completed not later than ninety days following the close of each fiscal year and shall accurately reflect the financial position of the Corporation at fiscal year end, inclusive of any impairment of capital or ability of the Corporation to comply with the provisions of this title.

`SEC. 1511. CONTROL OF INFORMATION:

`a. The term `Commission' shall be deemed to include the Corporatio n wherever such term appears in section 141 and subsections a. and b. of section 142 of title I.

`b. No contracts or arrangements shall be made, nor any contract co ntinued in effect, under section 1401, 1402, 1403, or 1404, unless the person wi th whom such contract or arrangement is made, or the contractor or prospective c ontractor, agrees in writing not to permit any individual to have access to Rest ricted Data, as defined in section 11 y. of title I, until the Office of Personn el Management shall have made an investigation and report to the Corporation on the character, associations, and loyalty of such individual, and the Corporation shall have determined that permitting such person to have access to restricted data will not endanger the common defense and security.

`c. The restrictions detailed in subsections b., c., d., e., f., g. , and h., of section 145 of title I shall be deemed to apply to the Corporation where they refer to the Commission or a majority of the members of the Commissio n, and to the Administrator where they refer to the General Manager.

`d. The Administrator shall keep the appropriate congressional comm ittees fully and currently informed with respect to all of the Corporation's act ivities. To the extent consistent with the other provisions of this section, the Corporation shall make available to any of such committees all books, financial records, reports, files, papers, memoranda, or other information possessed by t he Corporation upon receiving a request for such information from the chairman o f such committee.

`e. Whenever the Corporation submits to the President, or the Offic e of Management and Budget, any budget, legislative recommendation, testimony, o r comments on legislation, prepared for submission to the Congress, the Corporat ion shall concurrently transmit a copy thereof to the appropriate committees of Congress.

`f. The Corporation shall have no power to control or restrict the dissemination of information other than as granted by this or any other law.

`SEC. 1512. PATENTS AND INVENTIONS:

`a. The term `Commission' shall be deemed to include the Corporatio n wherever such term appears in section 152, 153b. (1), and 158 of title I. The Corporation shall pay such royalty fees for patents licensed to it under section 153 b. (1) of title I as are paid by the Department under that provision. Nothi ng in title I or this title shall affect the right of the Corporation to require that patents granted on inventions, that have been conceived or first reduced t o practice during the course of research or operations of, or financed by the Co rporation, be assigned to the Corporation.

`b. The Department shall notify the Corporation of all reports here tofore or hereafter filed with it under subsection 151 c. of title I and all app lications for patents heretofore or hereafter filed with the Commissioner of Pat ents of which the Department has notice under subsection 151 d. of title I or ot herwise, whenever such reports or applications involve matters pertaining to the functions or responsibilities of the Corporation in accordance with this title. The Department shall make all such reports available to the Corporation, and th e Commissioner of Patents shall provide the Corporation access to all such appli cations. All reports and applications to which access is so provided shall be ke pt in confidence by the Corporation, and no information concerning the same give n without authority of the inventor or owner unless necessary to carry out the p rovisions of any Act of Congress.

`c. The Corporation, without regard for any of the conditions speci fied in paragraph 153 c. (1), (2), (3), or (4) of title I, may at any time make application to the Department for a patent license for the use of an invention o r discovery useful in the production or utilization of special nuclear material or atomic energy covered by a patent when such patent has not been declared to b e affected with the public interest under subsection 153 b. (1) of title I and w hen use of such patent is within the Corporation's authority. Any such applicati on shall constitute an application under subsection 153 c. of title I subject, e xcept as specified above, to all the provisions of subsections 153 c., d., e., f ., g., and h., of title I.

`d. With respect to the Corporation's functions under this title, s ection 158 of title I shall be deemed to include the Corporation within the phra se, `any other licensee' in the first sentence thereof and within the phrase `su ch licensee' in the second sentence thereof.

`e. The Corporation shall not be liable directly or indirectly for any damages or financial responsibility with respect to secrecy orders imposed u nder section 181 of title 35, United States Code, through 187.

`f. The Corporation shall not be liable or responsible for any paym ents made or awards under subsection 157 b.(3) of title I, or any settlements or judgments involving claims for alleged patent infringement except to the extent that any such awards, settlements or judgments are attributable to activities o f the Corporation after the effective date of this title.

`g. The Corporation shall keep currently informed as to matters aff ecting its rights and responsibilities under chapter 13 of title I as modified b y this section and shall take all appropriate action to avail itself of such rig hts and satisfy such responsibilities. The Department in discharging its respons ibilities under chapter 13 of title I shall exercise diligence in informing the Corporation of matters affecting the responsibilities and jurisdiction of the Co rporation and seeking and following as appropriate the advice and recommendation of the Corporation in such matters.

`CHAPTER 26. LICENSING, TAXATION, AND MISCELLANEOUS PROVISIONS
`SEC. 1601. Licensing:

`a. Notwithstanding any other provision of law, with respect solely to facilities, equipment and materials for activities related to the isotopic s eparation of uranium by the gaseous diffusion technology at facilities in existe nce as of the date of enactment of this title, the Corporation and its contracto rs are hereby exempted from the licensing requirements and prohibitions of secti ons 57, 62, 81 and other provisions of title I, to the same extent as the Depart ment and its contractors are exempt in regard to the Department's own functions and activities. Such exemption shall remain in effect unless and until the Corpo ration and its contractors receive all necessary licenses for such facilities, e quipment and materials as are required under title I.

`b. Within two years of the enactment of this title, the Commission shall promulgate regulations or issue other regulatory guidance under title I f or the licensing of facilities described in subsection (a) that employ the gaseo us diffusion technology.

`c. Within one year after the promulgation of regulations or the is suance of other regulatory guidance under subsection (b), the Corporation and it s contractors shall make necessary applications for and otherwise seek to obtain such licenses as will remove the exemption provided under subsection (a). As pa rt of its application, the Corporation shall submit an Environmental Impact Stat ement in accordance with the requirements of the National Environmental Policy A ct. The Commission shall adopt this statement to the extent practicable under th e National Environmental Policy Act. In preparing such statement, the Corporatio n, and in making any licensing decision, the Commission, shall not consider the need for such facilities, alternatives to such facilities, or the costs compared to the benefits of such facilities. The Commission shall act on licensing reque sts by the Corporation in a timely manner.

`d. The Corporation shall not transfer or deliver any source, speci al nuclear or byproduct materials or production or utilization facilities, as de fined in title I, to any person who is not properly qualified or licensed under the provisions of title I.

`e. The Corporation shall be subject to the regulatory jurisdiction of the Commission and the Department of Transportation with respect to the pack aging and transportation of source, special nuclear and byproduct materials.

`SEC. 1602. Exemption From Taxation and Payments in Lieu of Taxes:

`a. In order to render financial assistance to those States and loc alities in which the facilities of the Corporation are located, beginning in fis cal year 1996, the Corporation is authorized and directed to make payments to St ate and local governments as provided in this section. Such payments shall be in lieu of any and all State and local taxes on the real and personal property, ac tivities, and income of the Corporation. All property of the Corporation its act ivities and income are expressly exempted from taxation in any manner or form by any State, county, or other local government entity. The activities of the Corp oration for this purpose shall include the activities of organizations pursuant to cost-type contracts with the Corporation to manage, operate, and maintain its facilities. The income of the Corporation shall include income received by such organizations for the account of the Corporation. The income of the Corporation shall not include income received by such organizations for their own accounts and such income shall not be exempt from taxation.

`b. Beginning in fiscal year 1996, the Corporation shall make annua l payments, in amounts determined by the Corporation to be fair and reasonable, to the State and local governmental agencies having tax jurisdiction in any area where facilities of the Corporation are located. In making such determinations, the Corporation shall be guided by the following criteria:

`(1) Amounts paid shall not exceed the tax payments that would be made by a private industrial corporation owning similar facilities and engage d in similar activities at the same location: Provided, however, That t here shall be excluded any amount that would be payable as a tax on net income.

`(2) The Corporation shall take into account the customs and pr actices prevailing in the area with respect to appraisal, assessment, and classi fication of industrial property and any special considerations extended to large -scale industrial operations.

`(3) No amount shall be included to the extent that any tax unf airly discriminates against the class of taxpayers of which the Corporation woul d be a member if it were a private industrial corporation, compared with other t axpayers or classes of taxpayers.

`(4) Following the commencement of payments in fiscal year 1996 , no payment made to any taxing authority for any period shall be less than the payments which would have been made to such taxing authority for the same period by the Department and its cost-type contractors on behalf of the Department wit h respect to property that has been transferred to the Corporation under section 1505 and which would have been attributable to the ownership, management operat ion, and maintenance of the Department's uranium enrichment facilities, applying the laws and policies prevailing immediately to the enactment of this title.

`c. Payments shall be made by the Corporation at the time when paym ents of taxes by taxpayers to each taxing authority are due and payable: Pro vided, That no payment shall be made to the extent that the tax would apply to a period prior to fiscal year 1996.

`d. The determination by the Corporation of the amounts due hereund er shall be final and conclusive.

`SEC. 1603. Miscellaneous Applicability of Title I:

`a. Any references to the term `Commission' or to the Department in sections 105 b., 110 a., 161 c., 161 k., 161 q., 165 a., 221 a., 229, 230, and 232 of title I shall be deemed to include the Corporation.

`b. Section 188 of title I shall apply to licensed facilities of th e Corporation. For purposes of applying such section to facilities of the Corpor ation:

`(1) The term `Commission' shall be deemed to refer to the Secr etary;

`(2) There shall be no requirement for payment of just compensa tion to the Corporation, and receipts from operation of the facility in question shall continue to accrue to the benefit of the Corporation; and

`(3) The Secretary shall have the discretion to determine how a nd by whom the facility in question will be operated.

`SEC. 1604. COOPERATION WITH OTHER AGENCIES- The Corporation is emp owered to use with their consent the available services, equipment, personnel, a nd facilities of other civilian or military agencies and instrumentalities of th e Federal Government, on a reimbursable basis and on a similar basis to cooperat e with such other agencies and instrumentalities in the establishment and use of services, equipment, and facilities of the Corporation. Further, the Corporatio n may confer with and avail itself of the cooperation, services, records, and fa cilities of State, territorial, municipal or other local agencies.

`SEC. 1605. Applicability of Antitrust Laws:

`a. The Corporation shall conduct its activities in a manner consis tent with the policies expressed in the antitrust laws, except as required by th e public interest.

`b. As used in this subsection, the term `antitrust laws' means:

`(1) The Act entitled: `An Act to protect trade and commerce ag ainst unlawful restraints and monopolies,' approved July 2, 1890 (15 U.S.C. 1-7) , as amended;

`(2) The Act entitled, `An Act to supplement existing laws agai nst unlawful restraints and monopolies, and for other purposes,' approved Octobe r 15, 1914 (15 U.S.C. 12-27), as amended;

`(3) Sections 73 and 74 of the Act entitled, `An Act to reduce taxation, to provide revenue for the Government, and for other purposes,' approv ed August 27, 1894 (15 U.S.C. 8 and 9), as amended; and

`(4) The Act of June 19, 1936, chapter 592 (15 U.S.C. 13, 13a, 13b, and 21a).

`SEC. 1606. NUCLEAR HAZARD INDEMNIFICATION- The Administrator shall have the same authority to indemnify the contractors of the Corporation as the Secretary has to indemnify contractors under section 170 d. of title I. Except t hat with respect to any licenses issued to the Corporation by the Commission, th e Commission shall treat the Corporation and its contractors as its licensees fo r the purposes of section 170 of this Act.

`SEC. 1607. INTENT- It is hereby declared to be the intent of this title to aid the Corporation in discharging its responsibilities under this titl e by providing it with adequate authority and administrative flexibility to obta in necessary funds with which to assure the maximum achievement of the purposes hereof as provided herein, and this title shall be construed liberally to effect uate such intent.

`SEC. 1608. Report:

`a. Three years after enactment of this title or January, 1993, whi chever is later, the Administrator shall submit to the President and to Congress an interim report setting forth the views and recommendations of the Administra tor regarding transfer of the functions, powers, duties, and assets of the Corpo ration to private ownership. Five years after enactment of this title, the Admin istrator shall submit to the President and the Congress a final report setting f orth the views and recommendations of the Administrator regarding transfer of th e functions, powers, duties, and assets of the Corporation to private ownership. If the Administrator, in the final report, recommends such transfers, the repor t shall include a plan for implementation of the transfers.

`b. Within one hundred and eighty days after receipt of the final r eport under subsection (a), the President shall transmit to Congress his recomme ndations regarding the report, including a plan for implementation of any transf ers recommended by the President and any recommendations for legislation necessa ry to effectuate such transfers.

`CHAPTER 27. DECONTAMINATION AND DECOMMISSIONING

`SEC. 1701. Establishment:

`a. ESTABLISHMENT OF CORPORATE FUND- (1) There is hereby establishe d in the Treasury of the United States an account of the Corporation to be known as the Uranium Enrichment Decontamination and Decommissioning Corporate Fund (h ereinafter referred to in this chapter as the Corporate `Fund'). In accordance w ith section 1402(j), such account and any funds deposited therein, shall be avai lable to the Corporation for the exclusive purpose of carrying out the purposes of this chapter.

`(2) The Corporate Fund shall consist of:

`(A) Amounts paid into it by the Corporation in accordance with section 1702. a.; and

`(B) Any interest earned under subsection (b)(2).

`b. ADMINISTRATION OF CORPORATE FUND- (1) The Secretary of the Trea sury shall hold the Corporate Fund and, after consultation with the Corporation, annually report to the Congress on the financial condition and operations of th e Corporate Fund during the preceding fiscal year.

`(2) At the direction of the Corporation, the Secretary of the Trea sury shall invest amounts contained within such Fund in obligations of the Unite d States:

`(A) Having maturities determined by the Secretary of the Treas ury to be appropriate to the needs of the Fund, as determined by the Corporation ; and

`(B) Bearing interest at rates determined to be appropriate by the Secretary of the Treasury, taking into consideration the current average mar ket yield on outstanding marketable obligations of the United States with remain ing periods to maturity comparable to such obligations.

`(3) At the request of the Corporation, the Secretary of the Treasu ry shall sell such obligations and credit the proceeds to the Corporate Fund.

`c. ESTABLISHMENT OF FEE AND BASE FUND- (1) Beginning in fiscal yea r 1991 and lasting through fiscal year 1995, each licensee of a civilian nuclear power reactor shall pay a fee of .20 mills per kilowatt hour of net electricity generated by such reactor. Such fee shall be collected by the Corporation and i s established for purposes of reimbursing the Corporation for the costs of decon taminating and decommissioning uranium enrichment facilities of the Corporation which costs are attributable to the provision of separative work and other enric hment products, materials and services to commercial customers prior to the enac tment of this title.

`(2) There is hereby established in the Treasury of the United Stat es an account of the Corporation to be known as the Uranium Enrichment Decontami nation and Decommissioning Base Fund (hereinafter referred to in this chapter as the `Base Fund'). Notwithstanding any other provision of law, the Base Fund and all monies deposited therein shall be subject to appropriation and shall be mad e available exclusively to the Corporation for purposes of carrying out the purp oses of this chapter.

`(3) The Base Fund shall consist of:

`(A) Amounts paid into it by the Corporation in accordance with section 1702.b.; and

`(B) Any interest earned under subsection d.(2).

`d. ADMINISTRATION OF BASE FUND- (1) The Secretary of the Treasury shall hold the Base Fund and annually report to the Congress on the financial co ndition and operations of the Base Fund during the preceding fiscal year.
`(2) The Secretary of the Treasury shall invest amounts contained w ithin such Base Fund in obligations of the United States:

`(A) Having maturities determined by the Secretary of the Treas ury, in consultation with the Corporation to be appropriate to the needs of the Base Fund; and

`(B) Bearing interest at rates determined to be appropriate by the Secretary of the Treasury, taking into consideration the current average mar ket yield on outstanding marketable obligations of the United States with remain ing periods to maturity comparable to such obligations.

`(3) The Secretary of the Treasury shall sell such obligations and credit the proceeds to the Base Fund as made necessary by appropriations out of the Base Fund to the Corporation.

`SEC. 1702. DEPOSITS- a. Within sixty days of the end of each fisca l year, the Corporation shall make a payment into the Corporate Fund in an amoun t equal to the costs of decontamination and decommissioning that have been recov ered during such fiscal year by the Corporation in its prices and charges establ ished in accordance with section 1508 for products, materials, and services.

`b. As soon as practicable following enactment of this title, the C orporation shall establish procedures for the collection and payment of fees est ablished under section 1701.c. Such fees shall be paid by licensees on a quarter ly basis during each fiscal year and upon receipt by the Corporation shall be de posited in the Base Fund.

`SEC. 1703. Performance and Disbursements:

`a. When the Corporation determines that particular property should be decommissioned or decontaminated, or both, or with respect to the Oak Ridge Gaseous Diffusion Plant at such time as the plant is conveyed to the Corporation , the Corporation shall enter into a contract for the performance of such decomm issioning and decontamination.

`b. The Corporation shall pay for the costs of such decommissioning and decontamination out of amounts contained within the Corporate Fund and such amounts as are appropriated to it out of the Base Fund.

SEC. 4113. TREATMENT OF THE CORPORATION AS BEING PRIVATELY-OWNED FO R PURPOSES OF THE APPLICABILITY OF ENVIRONMENTAL AND OCCUPATIONAL SAFETY LAWS- T he United States Enrichment Corporation shall be subject to Federal, State and l ocal environmental laws and the Occupational Safety and Health Act (29 U.S.C. 65 1-678) to the same extent as is the Department of Energy as of the date of enact ment. After four years from the date of enactment of this title, the United Stat es Enrichment Corporation shall become subject to such laws to the same extent a s a privately-owned corporation, unless the President determines that additional time is necessary to achieve the purposes of title II of the Atomic Energy Act of 1954, as amended.

SEC. 4114. MISCELLANEOUS PROVISIONS- (a) Section 9101(3) of title 3 1, United States Code (relating to the definition of `wholly-owned Government co rporation') is amended by adding at the end of the following: `(N) United States Enrichment Corporation.'.

(b) In subsection 41 a. of the Atomic Energy Act of 1954, as amende d, the word `or' appearing before the numeral `(2)' is deleted, a semicolon is s ubstituted for a period at the end of the subsection and the following new parag raph is added: `or (3) are owned by the United States Enrichment Corporation.'.

(c) In subsection 53 c. (1) of the Atomic Energy Act of 1954, as am ended, the word `or' is inserted before the word `grant' and the phrase `or thro ugh the provision of production or enrichment services' is deleted in both place s where it appears in such subsection.

(d) The Atomic Energy Act of 1954, as amended, is further amended:

(1) By adding before the period at the end of the definition of the term `production facility' in section 11 v. a colon and the following: `Provided, however, That as the term is used in chapters 10 and 16 of this Act, other than with respect to export of a uranium enrichment production facili ty, it shall not include any equipment or device, or important component part es pecially designed therefor, capable of separating the isotopes of uranium or enr iching uranium in the isotope 235';

(2) By striking the period at the end of section 161 b. and add ing the following: `; in addition, the Commission shall prescribe such regulatio ns or orders as may be necessary or desirable to promote the Nation's common def ense and security with regard to control, ownership or possession of any equipme nt or device, or important component part especially designed therefor, capable of separating the isotopes of uranium or enriching uranium in the isotope 235;';

(3) By striking the phrase `section 103 or 104' in section 41 a . (2) and inserting in lieu thereof `this title'; and

(4) In section 236 by striking the word `or' following paragrap h (2) and adding after paragraph (3) `or (4) any uranium enrichment facility lic ensed by the Commission;'.

(5) In section 318(1) by striking the period after `activities' and by adding the following:

`(D) any facility owned by the United States Enrichment Corpora tion.'.

(e) Subsection 905(g)(1) of title II, United States Code, is amende d to include `United States Enrichment Corporation' at the end thereof.

(f) Section 306 of title III of the Energy and Water Development Ap propriations Act, 1988, Public Law 100-202, is repealed.

SEC. 4115. LIMITATION ON EXPENDITURES- (a) Notwithstanding any othe r provision of law, for fiscal year 1991 total expenditures of the United States Enrichment Corporation other than payments in lieu of taxes and intragovernment al transfers shall not exceed $1,289,000,000 and the Corporation shall pay into miscellaneous receipts of the Treasury of the United States dividends in the amo unt of at least $21,000,000.

(b) Notwithstanding any other provision of law, during fiscal years 1992 through 1995 total expenditures of the United States Enrichment Corporatio n other than payments in lieu of taxes and intragovernmental transfers shall not exceed an amount which is $323,000,000 less than total receipts from commercial customers during such years, and during such years the Corporation shall pay in to miscellaneous receipts of the Treasury of the United States dividends in the amount of at least $323,000,000.

SEC. 4116. SEVERABILITY- In any provision of this subtitle, or the application of any provisions to any entity, person or circumstance, shall for a ny reason be adjudged by a court of competent jurisdiction to be invalid, the re mainder of this subtitle, or the application of the same shall not be thereby af fected.

SEC. 4117. EFFECTIVE DATE- Except as otherwise provided, all provis ions of this subtitle shall take effect on the day following the end of the firs t full fiscal year quarter following the enactment of this act; Provided, ho wever, That the Administrator or Acting Administrator of the United States Enrichment Corporation may immediately exercise the management responsibilities and powers of subsection 1501 (a) of the Atomic Energy Act of 1954, as amended b y this Act and previous Acts.

Subtitle C

CHAPTER 1--SHORT TITLE, FINDINGS AND PURPOSE, DEFINITIONS

SEC. 4201. TITLE.

This subtitle may be cited as the `Uranium Security and Tailings Re clamation Act of 1989'.

SEC. 4202. FINDINGS AND PURPOSE.

(a) FINDINGS- The Congress finds for purposes of this subtitle that --

(1) the United States uranium industry has long been recognized as vital to United States energy independence and as essential to United States national security, but has suffered a drastic economic setback, including a 90 per centum reduction in employment, closure of almost all mines and mills, more than a 75 percent drop in production, and a permanent loss of uranium reserves;

(2) during the remainder of this century approximately 20 per c entum of United States electricity is expected to be produced from uranium fuele d powerplants owned by domestic electric utilities;

(3) the United States has been the leading uranium producing na tion and holds extensive proven reserves of natural uranium that offer the poten tial for secure sources of future supply;

(4) a variety of economic factors, policies of foreign governme nts, foreign export practices, the discovery and development of low cost foreign reserves, new Federal regulatory requirements, and cancellation of nuclear powe rplants have caused most United States producers to close or suspend operations over the past six years and have resulted in the domestic uranium industry being found `not viable' by the Secretary under provisions of the Atomic Energy Act o f 1954, as amended;

(5) providing assistance to the domestic uranium industry is es sential to--

(A) preclude an undue threat from foreign supply disruption s that could hinder the Nation's common defense and security,

(B) assure an adequate long-term supply of domestic uranium for the Nation's nuclear power program to preclude an undue threat from foreign supply disruptions or price controls, and

(C) aid in the Nation's balance-of-trade payments through f oreign sales;

(6) the Uranium Mill Tailings Radiation Control Act of 1978 (42 U.S.C. 7901-7942);

(A) was enacted to provide for the reclamation and regulati on of uranium and thorium mill tailings; and

(B) did not provide for a Federal contribution for the recl amation of tailings at uranium and thorium processing sites which were generated pursuant to Federal defense contracts;

(7) the owners of licensees of active uranium and thorium s ites and the Federal Government have each benefited from uranium and thorium pro duced at the active sites, and it is equitable that they share in the costs of r eclamation, decommissioning and other remedial actions at the commingled sites; and

(B) the creation of an assured system of financing will gre atly facilitate and expedite reclamation and remedial actions at active uranium and thorium processing sites.

(b) PURPOSE- It is the purpose of Chapters 2 and 3 of this subtitle to--

(1) ensure an adequate long-term supply of domestic uranium for the Nation's common defense and security and for the Nation's nuclear power pro gram;

(2) provide assistance to the domestic uranium industry; and

(3) establish, facilitate, and expedite a comprehensive system for financing reclamation and other remedial action at active uranium and thoriu m processing sites.

SEC. 4203. DEFINITIONS.

For purposes of this subtitle--

(1) the term `active site' means--

(A) any uranium or thorium processing site, including the m ill, containing by-product material for which a license (issued by the Nuclear R egulatory Commission or its predecessor agency under the Atomic Energy Act of 19 54, as amended, or by a State as permitted under section 274 of such Act (42 U.S .C. 2021)) for the production at such site of any uranium or thorium derived fro m ore--

(i) was in effect on January 1, 1978;

(ii) was issued or renewed after January 1, 1978; or

(iii) for which an application for renewal or issuance was pending on, or after January 1, 1978; and

(B) any other real property or improvement on such real pro perty that is determined by the Commission to be--

(i) in the vicinity of such site; and

(ii) contaminated with residual byproduct material;

(2) the term `byproduct material' has the meaning given such te rm in section 11 e. (2) of the Atomic Energy Act of 1954, as amended (42 U.S.C. 2014(e)(2));

(3) the term `civilian nuclear power reactor' means any civilia n nuclear powerplant required to be licensed under section 103 or section 104 of the Atomic Energy Act of 1954, as amended (42 U.S.C. 2133);

(4) the term `Corporation' means the United States Enrichment C orporation established under section 1202 of title II of the Atomic Energy Act o f 1954, as amended;

(5) the term `Department' means the Department of Energy;< /ul>

(6) the term `domestic uranium' means any uranium that has been mined in the United States including uranium recovered from uranium deposits in the United States by underground mining, open-pit mining, strip mining, in situ recovery, leaching, and ion recovery, or recovered from phosphoric acid manufac tured in the United States;

(7) the term `domestic uranium producer' means a person or enti ty who produces domestic uranium and who has, to the extent required by State an d Federal agencies having jurisdiction, licenses and permits for the operation, decontamination, decommissioning, and reclamation of sites, structures and equip ment;

(8) the term `enrichment tails' means uranium in which the quan tity of the U-235 isotope has been depleted in the enrichment process;

(9) the term `reclamation, decommissioning, and other remedial action' includes work, including but not limited to disposal work, accomplished in order to comply with all applicable requirements, including but not limited t o those established pursuant to the Uranium Mill Tailings Radiation Control Act of 1978, as amended, or where appropriate, with requirements established by a St ate that is a party to a discontinuance agreement under section 274 of the Atomi c Energy Act of 1954, as amended (42 U.S.C. 2021). The term shall also include w ork at an active site prior to the date of enactment of this act accomplished in order to comply with the foregoing requirements;

(10) the term `Secretary' means the Secretary of Energy;

(11) the terms `source material' and `special nuclear material' have the meaning given such terms in section 11 of the Atomic Energy Act of 195 4, as amended (42 U.S.C. 2014); and

(12) the term `tailings' means the wastes produced by the extra ction or concentration of uranium or thorium from any ore processed primarily fo r its source material content.

CHAPTER 2--URANIUM REVITALIZATION

SEC. 4210. VOLUNTARY OVERFEED PROGRAM.

(a) The Corporation shall establish, for a period of not less than five years commencing at the beginning of fiscal year 1992, a voluntary overfeed ing program which shall be made available to the Corporation's enrichment servic es customers. The term `overfeeding' means the use of uranium in the enrichment process in excess of the amount required at the transactional tails assay.< /ul>
(b) The Corporation shall encourage its enrichment services custome rs to participate in the voluntary overfeeding program as provided in this secti on. Uranium supplied by the enrichment customer shall be used by the Corporation for voluntary overfeeding in the enrichment process to reduce the amount of pow er required to produce the enriched uranium ordered by the enrichment services c ustomer. The dollar savings resulting from the reduced power requirements shall be credited to the enrichment services customer.

(c) In the event an enrichment services customer does not elect to provide uranium for voluntary overfeeding to be used to process its enrichment o rder, the Corporation shall establish a method for such uranium to be voluntaril y supplied by other enrichment services customer(s) which have expressed to the Corporation an interest in participating in such a program and the Corporation s hall credit the resulting dollar savings realized from the reduced power require ments to the enrichment services customer(s) providing the uranium.

(d) An enrichment services customer providing uranium for voluntary overfeeding shall certify to the Corporation that such uranium is domestic uran ium which has been actually produced by a domestic uranium producer after the en actment of this Act or domestic uranium actually produced by a domestic uranium producer before the enactment of this Act and held by it without sale, transfer or redesignation of the origin of such uranium on a DOE/NRC form 741.

(e) Within ninety days of the date of enactment of this Act, the Co rporation shall establish procedures to implement this program. Such procedures shall include, but not be limited to, delivery reporting and certification requi rements, and provisions for failure to comply with the requirements of the volun tary overfeeding program. The determination of the voluntary overfeeding credit and sufficient data to support such determination shall be available to the Corp oration's enrichment services customers and to qualified domestic producers.

SEC. 4211. NATIONAL STRATEGIC URANIUM RESERVE.

There is hereby established the National Strategic Uranium Reserve under the direction and control of the Secretary. The Reserve shall consist of 5 0,000,000 pounds of natural uranium contained in stockpiles or inventories curre ntly held by the United States for defense purposes. Effective on the date of en actment of this Act, use of the Reserve shall be retricted to military purposes and Government research. Use of the Department's stockpile of enrichment tails e xisting on the date of enactment of this Act shall be restricted to military pur poses.

SEC. 4212. RESPONSIBILITY FOR THE INDUSTRY.

(a) The Secretary shall have a continuing responsibility for the do mestic uranium industry, and shall take any action, which he determines to be ap propriate under existing law, to encourage the use of domestic uranium; Prov ided, however, That the Secretary, in fulfilling this responsibility, shall not use any supervisory authority over the Corporation. The Secretary shall rep ort annually to the appropriate committees of Congress on action taken with resp ect to the domestic uranium industry, including action to promote the export of domestic uranium pursuant to paragraph (b) of this section.

(b) ENCOURAGE EXPORT- The Department, with the cooperation of the D epartment of Commerce, the United States Trade Representative and other governme ntal organizations, shall encourage the export of domestic uranium. Within one h undred and eighty days of the date of enactment of this Act the Secretary shall develop recommendations and implement government programs to promote the export of domestic uranium.

SEC. 4213. GOVERNMENT URANIUM PURCHASES.

(a) After the date of enactment of this Act, the United States of A merica, its agencies and instrumentalities, shall only have the authority to ent er into contracts or orders for the purchase of uranium which is (1) of domestic origin and (2) is purchased from domestic uranium producers: Provided, That this section shall not affect purchases under a contract for delivery of a fixed amount of uranium entered into before the date of enactment of this Act.

(b) Subsection (a) shall not apply to the Tennessee Valley Authorit y.

SEC. 4214. SECRETARY'S AUTHORITY TO MAKE REGULATIONS.

The Secretary shall issue appropriate regulations to implement the purposes of this subtitle.

CHAPTER 3--REMEDIAL ACTION FOR ACTIVE PROCESSING SITES
SEC. 4220. REMEDIAL ACTION PROGRAM.

(a) IN GENERAL- Except as provided in subsection (b), the costs of decontamination, decommissioning, reclamation, and other remedial action at an a ctive uranium or thorium processing site shall be borne by persons licensed unde r section 62 or 81 of the Atomic Energy Act of 1954 (42 U.S.C. 2091, 2111) for a ny activity at such site which results or has resulted in the production of bypr oduct material.

(b) REIMBURSEMENT-

(1) IN GENERAL- The Secretary shall, subject to paragraph (2), reimburse at least annually a licensee described in subsection (a) for such port ion of the reclamation, decommissioning and other remedial action costs describe d in such subsection as are--

(A) determined by the Secretary to be attributable to taili ngs generated as an incident of sales to the United States; and

(B) incurred by such licensee not later than December 31, 2 002.

(2) AMOUNT-

(A) TO INDIVIDUAL ACTIVE SITE URANIUM LICENSEES- The amount of reimbursement paid to any licensee under paragraph (1) shall be determined b y the Secretary in accordance with regulations issued pursuant to section 221 an d shall not exceed an amount equal to $4.50 multiplied by the dry short tons of tailings located at the site as of the effective date of this subtitle and gener ated as an incident of sales to the United States.

(B) TO ALL ACTIVE SITE URANIUM LICENSEES- Payments made und er paragraph (1) to active site uranium licensees shall not in the aggregate exc eed $270,000,000.

(C) TO THORIUM LICENSEES- Payments made under paragraph (1) to the licensee of the active thorium site shall not exceed $30,000,000.

(D) INFLATION ESCALATION INDEX- The amounts in subsections (A), (B), and (C) of this section shall be increased annually based upon an infl ation index. The Secretary shall determine the appropriate index to apply.< /ul>

(E) ADDITIONAL REIMBURSEMENT- Provided however, (i) the Sec retary shall determine as of July 31, 2005, whether the amount authorized to be appropriated in section 4222, when considered with the $4.50 per dry short ton l imit on reimbursement, exceeds the total cost reimbursable to the licensees of a ctive sites for reclamation, decommissioning and other remedial action; and (ii) if the Secretary determines there is an excess, the Secretary may allow reimbur sement in excess of $4.50 per dry short ton on a prorated basis at such sites th at reclamation, decommissioning and other remedial action costs for tailings gen erated as an incident of sales to the United States exceed the $4.50 per dry sho rt ton limitation.

SEC. 4221. REGULATIONS.

The Secretary shall issue regulations governing reimbursement under section 4220. An active uranium or thorium processing site owner shall apply fo r reimbursement hereunder by submitting a statement for the amount of reimbursem ent, together with reasonable documentation in support thereof, to the Secretary . Any such statement for reimbursement, supported by reasonable documentation, s hall be approved by the Secretary and reimbursement therefor shall be made in a timely manner subject only to the limitations of section 4220.

SEC. 4222. AUTHORIZATION.

There is authorized to be appropriated for purposes of this chapter not more than $300,000,000 increased annually as provided in section 4220 based upon an inflation index as determined by the Secretary.

TITLE V--COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

SEC. 5001. FEES OF THE ENVIRONMENTAL PROTECTION AGENCY- (a) The Adm inistrator of the Environmental Protection Agency shall assess and collect fees and charges for services and activities carried out pursuant to the statutes whi ch are administered by the Agency in the amount of $22,000,000 for the fiscal ye ar 1991, and $33,000,000 in each of the fiscal years 1992, 1993, 1994, and 1995. Such sums shall be in addition to the sums the Agency is collecting for service s or activities upon the date of enactment of this Act. The amount of any fee or charge assessed pursuant to this section shall be established by rule after not ice and opportunity for public comment. Publicly owned wastewater treatment work s shall not be required to pay a fee associated with discharge permits required pursuant to section 402 of the Federal Water Pollution Control Act.

(b) Except as may otherwise be specifically provided by law with re gard to fees and charges, and their deposit and retention, any fees and charges established and collected by the Administrator of Environmental Protection Agenc y pursuant to this section or other statutes administered by the Agency shall be deposited in a special fund in the United States Treasury which thereafter shal l be available for appropriation, to remain available until expended, to carry o ut the Agency's activities for which the fee or charge is made.

NUCLEAR REGULATORY COMMISSION USER FEES AND ANNUAL CHARGES

SEC. 5002. (a) AMENDMENT TO ATOMIC ENERGY ACT- Chapter 19 of the At omic Energy Act of 1954 (42 U.S.C. 2015 et seq.) is amended by adding at the end the following new section:

`SEC. 292. USER FEES AND ANNUAL CHARGES.

`(a) ANNUAL ASSESSMENT-

`(1) AMOUNT- Except as provided in subparagraph (3), the Nuclea r Regulatory Commission (hereinafter in this section referred to as the Commissi on) shall annually assess and collect such fees and charges as are described in subsections (b) and (c) in an amount that approximates 100 percent of the budget authority for the Commission's Salaries and Expenses in the fiscal year in whic h such assessment is made, less any amount appropriated to the Commission from t he Nuclear Waste Fund in such fiscal year.

`(2) FIRST ASSESSMENT- The first assessment shall be made not l ater than September 30, 1991, and shall be based on the Commission's Salaries an d Expenses budget authority for fiscal year 1991.

`(3) LAST ASSESSMENT- The last assessment of annual charges as described in subsection (c) shall be made not later than September 30, 1995, and shall be based on the Commission's Salaries and Expenses budget authority for f iscal year 1995.

`(b) FEES FOR SERVICE OR THING OF VALUE- Pursuant to section 9701 o f title 31, United States Code, any person who receives a service or thing of va lue from the Commission shall pay fees to cover the Commission's costs in provid ing any such service or thing of value.

`(c) Annual Charges-

`(1) PERSONS SUBJECT TO CHARGE- Any person who holds a license from the Commission may be required to pay, in addition to the fees set forth in subsection (b), an annual charge.

`(2) AGGREGATE AMOUNT OF CHARGES- The aggregate amount of the a nnual charge collected from all persons described in paragraph (1) shall equal a n amount that approximates 100 percent of the budget authority for the Commissio n's Salaries and Expenses in the fiscal year in which such charge is collected, less any amount appropriated to the Commission from the Nuclear Waste Fund and t he amount of fees collected under subsection (b) in such fiscal year.
< /ul>
`(3) AMOUNT PER LICENSEE- The Commission shall establish, by ru le, a schedule of charges fairly and equitably allocating the aggregate amount o f charges described in paragraph (2) among the licensees described in paragraph (1). To the maximum extent practicable, the charges shall have a reasonable rela tionship to the cost of providing regulatory services and may be based on the al location of the Commission's resources among licensees or classes of licensees d escribed in paragraph (1).

`(d) DEFINITION- As used in this section, `Nuclear Waste Fund' mean s the fund established pursuant to section 302(c) of the Nuclear Waste Policy Ac t of 1982 (42 U.S.C. 10222(c)).'.

(b) REPEAL- Title VII of the Consolidated Omnibus Budget Reconcilia tion Act of 1985 (Public Law 99-272), as amended, is amended by striking subtitl e G. This repeal shall become effective upon promulgation of the Nuclear Regulat ory Commission's final rule implementing section 292 of the Atomic Energy Act of 1954.

(c) TABLE OF CONTENTS- The table of contents of the Atomic Energy A ct of 1954 is amended by adding after the term relating to section 291 the follo wing new item:

`Sec. 292. User fees and annual charges.'.

SEC. 5003. RECREATION USER FEES AT WATER RESOURCES DEVELOPMENT AREAS ADMINISTERED BY THE DEPARTMENT OF THE ARMY.

(a) The second sentence of section 210 of the Flood Control Act of 1968 (82 Stat. 746; 16 U.S.C. 4604-3) is amended to read:

`Notwithstanding section 460 of the Land and Water Conservation Fun d Act of 1965, as amended (78 Stat. 897; 16 U.S.C. 4604-6a(b)), the Secretary of the Army is authorized to charge fees for the use of specialized recreation sit es and facilities, including, but not limited to, improved campsites, swimming b eaches, and boat launching ramps; however, the Secretary shall not charge fees f or the use or provision of drinking water, wayside exhibits, general purpose roa ds, overlook sites, toilet facilities, or general visitor information. The fees shall be deposited into the special Treasury account for the Corps of Engineers that was established by section 460 of the Land and Water Conservation Fund Act of 1965, as amended (16 U.S.C. 4604-6a(b)).

(b) Section 4 of the Land and Water Conservation Fund Act of 1965, as amended (78 Stat. 897; 16 U.S.C. 4604-4(a)), as further amended by deleting t he next to the last sentence of subsection (b).

TITLE VI--NON-REVENUE PROVISIONS OF THE COMMITTEE ON FINANCE

SEC. 6000. AMENDMENT OF THE SOCIAL SECURITY ACT, TABLE OF CONTENTS.

(a) AMENDMENT OF THE SOCIAL SECURITY ACT- Except as otherwise expre ssly provided, whenever in this title an amendment or repeal is expressed in ter ms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Social Se curity Act.

(b) Table of Contents-

TITLE VI--NON-REVENUE PROVISIONS OF THE COMMITTEE ON FINANCE

Sec. 6000. Amendment of the Social Security Act; table of content s.

Subtitle A--Income Security

Part I--Child Support Enforcement

Sec. 6001. IRS intercept for non-AFDC families.

Sec. 6002. Commission on interstate child support.

Part II--Supplemental Security Income

Sec. 6010. Continuation of medicaid eligibility under section 161 9(b) past age 65.

Sec. 6011. Exclusion from income of impairment-related work expen ses.

Sec. 6012. Treatment of royalties and honoraria as earned income.

Sec. 6013. Evaluation by pediatrician in child disability determi nations.

Sec. 6014. Concurrent SSI and food stamp applications by institut ionalized individuals.

Sec. 6015. Reimbursement for vocational rehabilitation services f urnished during certain months of nonpayment of supplemental security income ben efits.

Sec. 6016. Certain non-cash contributions received by recipients of SSI benefits excluded from income.

Sec. 6017. Certain trusts not to be counted as a resource availab le to the recipient; trust not income in month in which it is established.< /ul>

Sec. 6018. Notification of certain individuals eligible to receiv e retroactive benefits.

Part III--Aid to Families With Dependent Children

Sec. 6020. Optional monthly reporting and retrospective budgeting .

Sec. 6021. Children receiving foster care maintenance or adoption assistance payments not treated as member of family unit for purposes of determ ining eligibility for, or amount of, AFDC benefit.

Sec. 6022. Elimination of term legal guardian.

Sec. 6023. Reporting of child abuse and neglect.

Sec. 6024. Disclosure of information about AFDC applicants and re cipients authorized for purposes directly connected to State foster care and ado ption assistance programs.

Sec. 6025. Repatriation.

Sec. 6026. Good cause exception to required cooperation for trans itional child care benefits.

Sec. 6027. Technical correction regarding penalty for failure to participate in JOBS program.

Sec. 6028. Technical correction regarding AFDC-UP eligibility req uirements.

Sec. 6029. Technical amendments to national commission on childre n.

Sec. 6030. Family support act demonstration projects.

Sec. 6031. Study of JOBS programs operated by Indian tribes and A laska Native organizations.

Sec. 6032. Proposed emergency assistance and AFDC special needs r egulations.

Part IV--Child Welfare and Foster Care; Child Care

Sec. 6040. Clarification of terminology relating to administrativ e costs.

Sec. 6041. Section 427 triennial reviews.

Sec. 6042. Independent living initiatives.

Sec. 6043. Grants to States for child care.

Part V--Old-Age, Survivors, and Disability Insurance

Sec. 6050. Continuation of disability benefits during appeal.

Sec. 6051. Repeal of special disability standard for widows and w idowers.

Sec. 6052. Dependency requirements applicable to a child adopted by a surviving spouse.

Sec. 6053. Representative payee reforms.

Sec. 6054. Fees for representation of claimants in administrative proceedings.

Sec. 6055. Applicability of administrative res judicata; related notice requirements.

Sec. 6056. Demonstration projects relating to accountability for telephone service center communications.

Sec. 6057. Telephone access to the Social Security Administration .

Sec. 6058. Amendments relating to social security account stateme nts.

Sec. 6059. Trial work period during rolling five-year period for all disabled beneficiaries.

Sec. 6060. Continuation of benefits on account of participation i n a non-State vocational rehabilitation program.

Sec. 6061. Limitation on new entitlement to special age-72 paymen ts.

Sec. 6062. Elimination of advanced crediting to the trust funds o f Social Security payroll taxes and revenues from taxation of Social Security be nefits.

Sec. 6063. Elimination of eligibility for retroactive benefits fo r certain individuals eligible for reduced benefits.

Sec. 6064. Consolidation of old methods of computing primary insu rance amounts.

Sec. 6065. Suspension of dependent's benefits when the worker is in an extended period of eligibility.

Subtitle B--Medicare

Part 1--Provisions Relating Only to Part A

Sec. 6101. Reductions in payments for capital-related costs of in patient hospital services.

Sec. 6102. Prospective payment hospitals.

Sec. 6103. Reduction in indirect medical education payments.

Sec. 6104. PPS exempt hospitals.

Sec. 6105. Expansion of hospice benefit.

Sec. 6106. Miscellaneous and technical amendments relating to par t A.

Part 2--Provisions Relating Only to Part B

SUBPART A--PAYMENT FOR PHYSICIANS' SERVICES

Sec. 6111. Reductions in payments for overvalued procedures.

Sec. 6112. Radiology services.

Sec. 6113. Anesthesia services.

Sec. 6114. Pathology services.

Sec. 6115. Update for physicians' services.

Sec. 6116. New physicians.

Sec. 6117. Assistants at surgery.

Sec. 6118. Advance determinations by carriers.

Sec. 6119. Limitation on beneficiary liability.

Sec. 6120. Statewide fee schedule areas for physicians' services.

Sec. 6121. Technical corrections relating to physician payment.

Sec. 6122. Billing for services of substitute physician.

Sec. 6123. Study of prepayment medical review screens.
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Sec. 6124. Utilization screens for physician visits in rehabilita tion hospitals.

Sec. 6125. Study of high volume payment adjustment.

SUBPART B--PAYMENTS FOR OTHER ITEMS AND SERVICES

Sec. 6130. Hospital outpatient services.

Sec. 6131. Clinical diagnostic laboratory services.

Sec. 6132. Durable medical equipment.

Sec. 6133. Orthotics and prosthetics.

SUBPART C--MISCELLANEOUS PROVISIONS

Sec. 6140. Community mental health centers.

Sec. 6141. Extension of Alzheimer's disease demonstration project s.

Sec. 6142. Certified registered nurse anesthetists.

Sec. 6143. Federally qualified health centers and rural health cl inics.

Sec. 6144. Separate payment under part B for services of certain health professionals.

Sec. 6145. New technology IOL's.

Sec. 6146. Rural nursing incentives.

Part 3--Provisions Relating to Parts A and B

Sec. 6150. End-stage renal disease services.

Sec. 6151. Staff-assisted home dialysis.

Sec. 6152. Medicare as secondary payer.

Sec. 6153. Health maintenance organizations.

Sec. 6154. Peer review organizations.

Sec. 6155. Improvements in and simplification of medigap policies .

Sec. 6156. Technical and miscellaneous provisions relating to par ts A and B.

Sec. 6157. Living wills and other advance directives.

Part 4--Provisions Relating to Premiums, Deductibles, and Coinsurance

Sec. 6161. Part B premium.

Sec. 6162. Change in Part B deductible.

Sec. 6163. 20 Percent coinsurance for clinical diagnostic laborat ory tests.

Subtitle C--Medicaid

Part I--Prescription Drug Discounts

Sec. 6201. Reimbursement for prescribed drugs under medicaid.

Part II--Purchase of Private Insurance

Sec. 6211. States required to pay premiums, deductibles, and coin surance for private health insurance coverage for medicaid beneficiaries where c ost effective.

Part III--Low Income Elderly

Sec. 6221. 1-year acceleration of and increase in option amount f or buy-in of premiums and cost sharing for indigent medicare beneficiaries.

Sec. 6222. Delay in counting Social Security COLA increases until new poverty guidelines implemented.

Part IV--Child Health

Sec. 6231. Medicaid child health provisions.

Part V--Home and Community-Based Services

Sec. 6241. Home and community-based care as optional service.

Sec. 6242. Community supported living arrangements services.

Sec. 6243. Medicaid coverage of personal care services outside th e home.

Part VI--Nursing Home Reform

Sec. 6251. Medicaid nursing home reform provisions.

Part VII--Miscellaneous and Technical Provisions

Sec. 6261. Demonstration projects to study the effect of allowing States to extend medicaid coverage to certain low-income families not otherwise qualified to receive medicaid benefits.

Sec. 6262. Medicaid respite demonstration project extended.< /ul>

Sec. 6263. Demonstration project to provide medicaid coverage for HIV-positive individuals, and certain pregnant women determined to be at risk o f contracting the HIV virus.

Sec. 6264. Mental health facility certification demonstration pro ject.

Sec. 6265. Optional State medicaid disability determinations inde pendent of the Social Security Administration.

Sec. 6266. Medically needy income levels for certain member famil ies.

Sec. 6267. Medicaid spenddown option.

Sec. 6268. Limitation on disallowances or deferral of Federal fin ancial participation for certain inpatient psychiatric hospital services for ind ividuals under age 21.

Sec. 6269. 5-year extension of certain waiver.

Sec. 6270. Medicaid long-term care insurance demonstration projec t.

Sec. 6271. Medicaid coverage of alcoholism and drug dependency tr eatment services.

Sec. 6272. Home and community-based waivers.

Sec. 6273. Medicaid provisions relating to health maintenance org anizations.

Sec. 6274. State flexibility in identifying and paying disproport ionate share hospitals.

Sec. 6275. Extension of provision on voluntary contributions and provider-specific taxes.

Sec. 6276. Prohibition on waiving reasonable and adequate payment rates.

Subtitle D--Trade Provisions

Part I--Customs User Fees

Sec. 6301. Customs user fees.

Part II--Technical Corrections

Sec. 6311. Technical amendments to the Harmonized Tariff Schedule .

Sec. 6312. Technical amendments to certain customs laws.

Subtitle E--Pension Benefit Guarantee Corporation Premiums

Sec. 6401. Increase in premium rates.

Subtitle F--Child Care and Development Block Grant

Sec. 6501. Child Care and Development Block Grant.

Subtitle A--Income Security

PART I--CHILD SUPPORT ENFORCEMENT

SEC. 6001. IRS INTERCEPT FOR NON-AFDC FAMILIES.

(a) AUTHORITY OF STATES TO REQUEST WITHHOLDING OF FEDERAL TAX REFUN DS FROM PERSONS OWING PAST DUE CHILD SUPPORT- Section 464(a)(2)(B) (42 U.S.C. 66 4(a)(2)(B)) is amended by striking `, and before January 1, 1991' before the p eriod.

(b) WITHHOLDING OF FEDERAL TAX REFUNDS AND COLLECTION OF PAST DUE C HILD SUPPORT ON BEHALF OF DISABLED CHILD OF ANY AGE, AND OF SPOUSAL SUPPORT INCL UDED IN ANY CHILD SUPPORT ORDER- Section 464(c) (42 U.S.C. 664(c)) is amended--

(1) in paragraph (2), by striking `minor child.' and inserting `qualified child (or a qualified child and the parent with whom the child is liv ing if the same support order includes support for the child and the parent).'; and

(2) by adding at the end the following:

`(3) For purposes of paragraph (2), the term `qualified child' mean s a child--

`(A) who is a minor; or

`(B)(i) who, while a minor, was determined to be disabled under title II or XVI; and

`(ii) for whom an order of support is in force.'.

(c) EFFECTIVE DATE- The amendments made by subsection (b) shall tak e effect on January 1, 1991.

SEC. 6002. COMMISSION ON INTERSTATE CHILD SUPPORT.

Section 126 of the Family Support Act of 1988 (Public Law 100-485) is amended--

(1) in subsection (d)--

(A) by striking `1990' in paragraph (1) and inserting `1991 '; and

(B) by striking `May 1, 1991' in paragraph (2) and insertin g `May 1, 1992';

(2) in subsection (e), by adding at the end thereof the followi ng new paragraph:

`(5)(A) Individuals may be appointed to serve the Commission withou t regard to the provisions of title 5 that govern appointments in the Competitiv e Service, without regard to the Competitive Service, and without regard to the Classification System in chapter 53 of title 5, United States Code. The Chairman of the Commission may fix the compensation of the Executive Director at a rate that shall not exceed the maximum rate of the basic pay payable under GS-18 of t he General Schedule as contained in title 5, United States Code.

`(B) The Executive Director may appoint and fix the compensation of such additional personnel as the Executive Director considers necessary to carr y out the duties of the Commission. Such personnel may be appointed without rega rd to the provisions of title 5, United States Code, governing appointments in t he Competitive Service, and may be paid without regard to the provisions of chap ter 51 and subchapter III of chapter 53 of such title relating to classification and General Schedule pay rates.

`(C) On the request of the Chairperson of the Commission, the head of any Federal department or agency may detail, on a reimbursable basis, any of the personnel of such agency to the Commission to assist the Commission in carry ing out its duties under this section without regard to section 3341 of title 5, United States Code.'; and

(3) in subsection (f)(1), by striking `July 1, 1991' and insert ing `July 1, 1992'.

PART II--SUPPLEMENTAL SECURITY INCOME

SEC. 6010. CONTINUATION OF MEDICAID ELIGIBILITY UNDER SECTION 1619(b) PAST AGE 65.

(a) IN GENERAL- Paragraph (1) of section 1619(b) (42 U.S.C. 1382h(b )) is amended in the matter preceding subparagraph (A) by striking `under age 65 '.

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall appl y with respect to benefits payable for months beginning after the date of the e nactment of this Act.

SEC. 6011. EXCLUSION FROM INCOME OF IMPAIRMENT-RELATED WORK EXPENSES.

(a) IN GENERAL- Section 1612(b)(4)(B)(ii) (42 U.S.C. 1382a(b)(4)(B) (ii)) is amended by striking `(for purposes of determining the amount of his or her benefits under this title and of determining his or her eligibility for such benefits for consecutive months of eligibility after the initial month of such eligibility)'.

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall appl y to benefits payable for calendar months beginning after the date of the enactm ent of this Act.

SEC. 6012. TREATMENT OF ROYALTIES AND HONORARIA AS EARNED INCOME.

(a) IN GENERAL- Section 1612(a) (42 U.S.C. 1382a(a)) is amended--

(1) in paragraph (1)--

(A) in subparagraph (C), by striking `; and' at the end of the subparagraph and inserting a semicolon; and

(B) by inserting after subparagraph (D) the following new subpa ragraph:

`(E) any royalty which is earned in connection with any publica tion of the work of an individual or any portion of any honorarium which is rece ived for services rendered; and'; and

(2) in subparagraph (F) of paragraph (2), by inserting before the p eriod `, other than royalties described in paragraph (1)(E) of this subsection'.

(b) EFFECTIVE DATE- The amendments made by this section shall apply with respect to benefits for months beginning on or after the first day of the 18th calendar month following the month in which this Act is enacted.

SEC. 6013. EVALUATION BY PEDIATRICIAN IN CHILD DISABILITY DETERMINATI ONS.

Section 1614(a)(3) (42 U.S.C. 1382c(a)(3)) is amended by adding at the end the following new subparagraph:

`(H) In making determinations with respect to disability of a child under the age of 18 under this title, the Secretary shall make reasonable effor ts to ensure that a qualified pediatrician or other individual who specializes i n a field of medicine appropriate to the disability of such child (as determined by the Secretary) evaluates the case of such child.'.

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall appl y to determinations made in or after the sixth month beginning after the date of the enactment of this Act.

SEC. 6014. CONCURRENT SSI AND FOOD STAMP APPLICATIONS BY INSTITUTIONA LIZED INDIVIDUALS.

Section 1631(m) (42 U.S.C. 1383(m)) is amended by striking the seco nd sentence and inserting the following new sentence: `The Secretary and the Sec retary of Agriculture shall develop a procedure under which an individual who ap plies for supplemental security income benefits under this subsection shall also be permitted to apply at the same time for participation in the food stamp prog ram authorized under the Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.).'.< /ul>
SEC. 6015. REIMBURSEMENT FOR VOCATIONAL REHABILITATION SERVICES FURNI SHED DURING CERTAIN MONTHS OF NONPAYMENT OF SUPPLEMENTAL SECURITY INCOME BENEFIT S.

(a) IN GENERAL- (1) Section 1615(d) (42 U.S.C. 1382d(d)) is amended by inserting immediately after the first sentence the following: `In such cases the reimbursement may include costs incurred for any month for which the indivi dual received a benefit under this title (including assistance pursuant to secti on 1619(b)), received a federally administered State supplementary payment, or w as ineligible (for a reason other than cessation of disability or blindness) to receive a benefit pursuant to section 1611, an agreement under section 1616(a), section 1619, and an agreement under section 212(b) of Public Law 93-66, but onl y for months prior to the thirteenth consecutive month of ineligibility.'.< /ul>
(b) EFFECTIVE DATE- The amendment made by this section shall be eff ective on the date of the enactment of this Act and shall apply to claims for re imbursement pending on or after such date.

SEC. 6016. CERTAIN NON-CASH CONTRIBUTIONS RECEIVED BY RECIPIENTS OF S SI BENEFITS EXCLUDED FROM INCOME.

(a) CONTRIBUTIONS (OTHER THAN CASH PAID DIRECTLY TO THE RECIPIENT) MADE TO OBTAIN SOCIAL SERVICES OR FOR MAINTENANCE OF HOME- (1) Section 1612(b) ( 42 U.S.C. 1382a(b)) is amended--

(A) by striking `and' at the end of paragraph (15);

(B) by striking the period at the end of paragraph (16) and ins erting a semicolon; and

(C) by inserting after paragraph (16) the following;
< /ul>
`(17) contributions other than cash paid directly to the recipi ent which are not in the form of food, clothing, or shelter, or may not be used to obtain food, clothing, or shelter and are for the purchase of--

`(A) any service, including those which are--

`(i) designed to assist an eligible individual who has any physical or mental impairment to function in society on a level comparable t o that of an individual who is not so impaired; and

`(ii) provided by a recognized social services or educa tional agency, whether governmental or private, and whether nonprofit or operate d for profit;

`(B) vocational rehabilitation services;

`(C) private medical insurance coverage where the private i nsurer is to be the first payor;

`(D) medical care;

`(E) transportation;

`(F) educational services (including continuing adult educa tion, postsecondary education, and vocational education), including books, tuiti on, laboratory fees, and any other costs related to education except those for r oom and board;

`(G) personal assistance or attendant care services; or

`(H) services or equipment related to the quality and livea bility of the individual's shelter and which are not for the purposes of rent, m ortgage, real property taxes, garbage collection and sewerage services, water, h eating fuel, electricity, or gas; but permissible contributions include--

`(i) payment for telephone services;

`(ii) payment for repairs to shelter;

`(iii) payment for repairs or replacement of heating so urce in shelter; and

`(iv) purchase of any appliance, if such purchase will not result in the individual's household goods exceeding the amount which has be en determined by the Secretary to be reasonable under section 1613(a)(2)(A).'.

(2) The amendments made by paragraph (1) shall apply to determinati ons of income made in months following the date of the enactment of this Act.

(b)(1) RULES GOVERNING CIRCUMSTANCES UNDER WHICH CONTRIBUTION OF A SHELTER IS TO BE COUNTED AS INCOME- Section 1612(a)(2) (42 U.S.C. 1382a(a)(2)) i s amended--

(A) in subparagraph (E), by striking `; and' and inserting `, e xcept that receipt of any sum or property as a result of inheritance, gift, or s upport shall be treated as income only in the month in which the individual lega lly has access to the funds to use for the individual's own benefit;';

(B) in subparagraph (F), by striking the period and inserting ` ; and'; and

(C) by inserting at the end the following:

`(G) the value of an ownership interest in a shelter receiv ed, but the value of such interest shall be included in income only in the month of receipt and pursuant to the following rules:

`(i) If the individual resides in the shelter at the ti me of the conveyance, the limitations established by the Secretary for presuming a maximum value for in-kind support shall apply.

`(ii) If the individual does not reside in the shelter at the time of the conveyance, the full value of the interest shall be income in the month of receipt.'.

(2) The amendments made by paragraph (1) shall apply to determinati ons of income made in or after the sixth month beginning after the date of the e nactment of this Act.

SEC. 6017. CERTAIN TRUSTS NOT TO BE COUNTED AS A RESOURCE AVAILABLE T O THE RECIPIENT; TRUST NOT INCOME IN MONTH IN WHICH IT IS ESTABLISHED.

(a) CIRCUMSTANCES UNDER WHICH TRUST CREATED FOR BENEFIT OF RECIPIEN T SHALL NOT BE COUNTED AS A RESOURCE- Section 1613(a) (42 U.S.C. 1382b(a)) is am ended--

(1) by striking `and' at the end of paragraph (7);

(2) by striking the period at the end of paragraph (8) and inse rting `, and'; and

(3) by inserting after paragraph (8) the following:

`(9) any amount set aside in a trust or similar legal device, e ither by the individual or on behalf of the individual, for the purpose of provi ding assistance to the individual, so long as the individual does not have acces s to the assets of the trust. An individual does not have access to assets held in a trust if the trustee, and not the individual, has the discretion to determi ne when such assets ought to be distributed to or for such individual and the am ount of any such distribution. The authority for discretion by the trustee to us e the assets of the trust for the support and maintenance of the individual, or to supplement any benefits available to the individual under title XVI or other public benefits, shall not mean that the individual has access to these assets. The fact that the trustee is also the representative payee for the individual or relative of the individual shall not be construed as causing trust assets to be accessible to the individual if all the other requirements of this subsection a re satisfied.'.

(b) CREATION OF TRUST NOT TO BE COUNTED AS INCOME IN MONTH OF CREAT ION; LATER PLACEMENT OF FUNDS OR PROPERTY IN THE TRUST ALSO NOT COUNTED AS INCOM E- (1) Section 1612(b) (42 U.S.C. 1382a(b)) is amended--

(A) by striking `and' at the end of the paragraph (16),

(B) by striking the period at the end of the paragraph (17) add ed by section 6016(a)(1)(C) of this Act and inserting `; and'; and

(C) by inserting after the paragraph (17) added by section 601 6(a)(1)(C) of this Act the following:

`(18) any funds or other property placed in a trust for the ben efit of the individual over which the individual has no discretion as to use sha ll not be treated as income either at the time of creation of the trust or if pl aced in the trust after its creation.'.

(2) The amendments made by paragraph (1) shall apply to determinati ons of income made in or after the sixth month beginning after the date of the e nactment of this Act.

SEC. 6018. NOTIFICATION OF CERTAIN INDIVIDUALS ELIGIBLE TO RECEIVE RE TROACTIVE BENEFITS.

In notifying individuals of their eligibility to receive retroactiv e benefits under Sullivan v. Zebley, 110 S. Ct. 2658 (1990), the Secretary shall include written notice, in language that is easily understandable, explaining--

(1) the 6-month limitation on the exclusion from resources unde r section 1613(a)(7) of the Social Security Act (42 U.S.C. 1382b(a)(7));

(2) the potential effects under title XVI of the Social Securit y Act, attributable to the receipt of such payment, including--

(A) potential discontinuation of eligibility; and

(B) potential reductions in the amount of benefits;

(3) the possibility of establishing a supplemental security inc ome (SSI) special needs trust account that--

(A) designates the individual for whom such payment is made as the beneficiary; and

(B) may not be considered as income or resources for the pu rposes of this title; and

(4) that legal assistance in establishing such a trust may be a vailable through legal referral services offered by a State or local bar associa tion, or through the Legal Services Corporation.

PART III--AID TO FAMILIES WITH DEPENDENT CHILDREN

SEC. 6020. OPTIONAL MONTHLY REPORTING AND RETROSPECTIVE BUDGETING.

(a) OPTIONAL MONTHLY REPORTING- Section 402(a)(14) (42 U.S.C. 602(a )(14)) is amended--

(1) by striking `with respect to' and all that follows through `(A) provide' and insert `provide, at the option of the State and with respect t o such category or categories as the State may select and identify in its State plan (A)';

(2) by striking `(with the prior approval of the Secretary in r ecent work history and earned income cases)'; and

(3) by striking `upon a determination' and all that follows thr ough `paragraph'.

(b) OPTIONAL RETROSPECTIVE BUDGETING- Section 402(a)(13) (42 U.S.C. 602(a)(13)) is amended by striking all that precedes subparagraph (A) and inser ting the following:

`(13) at the option of the State, provide that--'.

(c) EFFECTIVE DATE- The amendments made by this section shall take effect with respect to reports pertaining to, or aid payable for, months beginni ng in or after October 1990.

SEC. 6021. CHILDREN RECEIVING FOSTER CARE MAINTENANCE OR ADOPTION ASS ISTANCE PAYMENTS NOT TREATED AS MEMBER OF FAMILY UNIT FOR PURPOSES OF DETERMININ G ELIGIBILITY FOR, OR AMOUNT OF, AFDC BENEFIT.

(a) IN GENERAL- Part A of title IV (42 U.S.C. 601 et seq.) is amend ed by inserting after section 408 the following new section:

`EXCLUSION FROM AFDC UNIT OF CHILD FOR WHOM FEDERAL, STATE, OR LOCAL FOSTER CARE MAINTENANCE OR ADOPTION ASSISTANCE PAYMENTS ARE MADE.

`SEC. 409. Notwithstanding any other provision of this title, a chi ld with respect to whom foster care maintenance payments or adoption assistance payments are made under part E or under State or local law shall not, for the pe riod for which such payments are made, be regarded as a member of a family for p urposes of determining the amount of benefits of the family under this part, and the income and resources of such child shall be excluded from the income and re sources of a family under this part unless, in the case of a child with respect to whom adoption assistance payments are so made, such exclusion would reduce th e benefits of the family under this part.'.

(b) CONFORMING REPEAL- Section 478 (42 U.S.C. 678) is hereby repeal ed.

(c) EFFECTIVE DATE- The amendment made by subsection (a) and the re peal made by subsection (b) shall take effect on the first day of the first mon th beginning after the date that is 6 months after the date of the enactment of this Act.

SEC. 6022. ELIMINATION OF TERM LEGAL GUARDIAN.

(a) IN GENERAL- Section 402(a)(39) (42 U.S.C. 602(a)(39)) is amende d--

(1) by striking `or legal guardian'; and

(2) by striking `or legal guardians'.

(b) EFFECTIVE DATE- The amendments made by subsection (a) shall tak e effect on the date of the enactment of this Act.

SEC. 6023. REPORTING OF CHILD ABUSE AND NEGLECT.

(a) CONCERNING AFDC APPLICANTS AND RECIPIENTS-

(1) IN GENERAL- Section 402(a)(16) (42 U.S.C. 602(a)(16)) is am ended to read as follows:

`(16) provide that the State agency will--

`(A) report to an appropriate agency or official, known or suspected instances of physical or mental injury, sexual abuse or exploitation, or negligent treatment or maltreatment of a child receiving aid under part B or this part under circumstances which indicate that the child's health or welfare is threatened thereby; and

`(B) provide such information with respect to a situation d escribed in subparagraph (A) as the State agency may have;'.

(2) CONFORMING AMENDMENTS- Section 402(a)(9) (42 U.S.C. 602(a)( 9)) is amended--

(A) in subparagraph (C), by striking `and'; and

(B) by inserting `, and (E) reporting and providing informa tion pursuant to paragraph (16) to appropriate authorities with respect to known or suspected child abuse or neglect' before the 1st semicolon.

(b) CONCERNING RECIPIENTS OF FOSTER CARE OR ADOPTION ASSISTANCE-

(1) IN GENERAL- Section 471(a)(9) (42 U.S.C. 671(a)(9)) is amen ded to read as follows:

`(9) provide that the State agency will--

`(A) report to an appropriate agency or official, known or suspected instances of physical or mental injury, sexual abuse or exploitation, or negligent treatment or maltreatment of a child receiving aid under part B or this part under circumstances which indicate that the child's health or welfare is threatened thereby; and

`(B) provide such information with respect to a situation d escribed in subparagraph (A) as the State agency may have;'.

(2) CONFORMING AMENDMENTS- Section 471(a)(8) (42 U.S.C. 671(a)( 8)) is amended--

(A) in subparagraph (C), by striking `and'; and

(B) by inserting `, and (E) reporting and providing informa tion pursuant to paragraph (9) to appropriate authorities with respect to known or suspected child abuse or neglect' before the 1st semicolon.

(c) EFFECTIVE DATE- The amendments made by this section shall take effect on the date of the enactment of this Act.

SEC. 6024. DISCLOSURE OF INFORMATION ABOUT AFDC APPLICANTS AND RECIPI ENTS AUTHORIZED FOR PURPOSES DIRECTLY CONNECTED TO STATE FOSTER CARE AND ADOPTIO N ASSISTANCE PROGRAMS.

(a) IN GENERAL- Section 402(a)(9)(A) (42 U.S.C. 602(a)(9)(A)) is am ended by striking `or D' and inserting `, D, or E'.

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall take effect on the date of the enactment of this Act.

SEC. 6025. REPATRIATION.

(a) IN GENERAL- Section 1113 of the Social Security Act (42 U.S.C. 1313), as amended by section 140 of the Customs and Trade Act of 1990 (Public La w 101-382) is amended--

(1) in subsection (d), by striking `on or after October 1, 1989 ' and inserting `after September 30, 1991'; and

(2) by adding at the end thereof the following new subsection:

`(e)(1) The Secretary may accept on behalf of the United States gif ts, in cash or in kind, for use in carrying out the program established under th is section. Gifts in the form of cash shall be credited to the appropriation ac count from which this program is funded, in addition to amounts otherwise approp riated, and shall remain available until expended.

`(2) Gifts accepted under paragraph (1) shall be available for obli gation or other use by the United States only to the extent and in the amounts p rovided in appropriation Acts.'.

(b) EFFECTIVE DATE- The amendments made by subsection (a) shall be effective for fiscal years beginning after September 30, 1989.

SEC. 6026. GOOD CAUSE EXCEPTION TO REQUIRED COOPERATION FOR TRANSITIO NAL CHILD CARE BENEFITS.

(a) IN GENERAL- Section 402(g)(1)(A)(vi)(II) (42 U.S.C. 602(g)(1)(A )(vi)(II)) is amended by inserting `, without good cause for refusing to coopera te as determined by the State agency in accordance with standards prescribed by the Secretary, which standards shall take into consideration the best interests of the child for whom child care is to be provided' before the period.

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall take effect on the date of the enactment of this Act.

SEC. 6027. TECHNICAL CORRECTION REGARDING PENALTY FOR FAILURE TO PART ICIPATE IN JOBS PROGRAM.

(a) IN GENERAL- Section 407(b)(1)(B)(iii) (42 U.S.C. 607(b)(1)(B)(i ii)) is amended--

(1) before the dash, in the matter preceding subclause (I), by striking `child or relative specified in subsection (a)' and inserting `parent d escribed in subparagraph (A)(i) and to any spouse of such parent (unless such sp ouse is participating in a program under part F)'; and

(2) in subclause (I), by striking `if and for so long as such c hild's parent described in subparagraph (A)(i)' and inserting `if and for so lon g as such parent'.

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall take effect on the date of the enactment of this Act.

SEC. 6028. TECHNICAL CORRECTION REGARDING AFDC-UP ELIGIBILITY REQUIRE MENTS.

(a) IN GENERAL- Section 407(d)(1) (42 U.S.C. 607(d)(1)) is amended- -

(1) by striking `a calendar quarter (A)' and inserting `(A) a c alendar quarter';

(2) by striking `or' at the end of subparagraph (A); and

(3) by inserting `, and (C) a calendar quarter ending before Oc tober 1990 in which such individual participated in a community work experience program under section 409 (as in effect immediately before October 1, 1990) or t he work incentive program established under part C (as in effect immediately bef ore such date)' before the semicolon.

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall take effect on the date of the enactment of this Act.

SEC. 6029. TECHNICAL AMENDMENTS TO NATIONAL COMMISSION ON CHILDREN.

Section 1139(d) (42 U.S.C. 1320b-9(d)) is amended in the matter pre ceding paragraph (1), by striking `an interim report no later than March 31, 199 1, and a final report no later than September 30, 1990' and inserting `an interi m report no later than September 30, 1990, and a final report no later than Marc h 31, 1991'.

SEC. 6030. FAMILY SUPPORT ACT DEMONSTRATION PROJECTS.

Section 505 of the Family Support Act of 1988 is amended--

(1) in subsection (a), by inserting `in each of the fiscal year s 1990, 1991, and 1992,' before `shall'; and

(2) in subsection (e), by striking `September 30, 1989' and ins erting `September 30 of the fiscal year specified in the agreement described in subsection (a)'.

SEC. 6031. STUDY OF JOBS PROGRAMS OPERATED BY INDIAN TRIBES AND ALASK A NATIVE ORGANIZATIONS.

(a) IN GENERAL- Not later than 180 days after the date of the enact ment of this Act, the Comptroller General of the United States (hereafter in thi s section referred to as the `Comptroller') shall conduct a study of the impleme ntation of section 482(i) of the Social Security Act (42 U.S.C. 682(i)) relating to job opportunities and basic skills training programs (hereafter in this sect ion referred to as `JOBS programs') operated by Indian tribes and Alaskan Native organizations (as defined in paragraph (5) of such section 482(i)).

(b) REQUIREMENTS FOR STUDY- In conducting the study described in su bsection (a) the Comptroller shall--

(A) identify any problems associated with the implementation of section 482(i) of the Social Security Act; and

(B) assess (to the extent practicable) the effectiveness of the JOBS programs operated by Indian tribes and Alaskan Native organizations.< /ul>

(c) REPORT- Upon completion of the study described in subsection (a ), the Comptroller shall submit a report to the appropriate committees of the Co ngress that includes--

(A) a summary of the findings of the study; and

(B) recommendations with respect to proposed legislation or cha nges in administrative policy to improve the effectiveness of JOBS programs cond ucted pursuant to section 482(i) of the Social Security Act.

SEC. 6032. PROPOSED EMERGENCY ASSISTANCE AND AFDC SPECIAL NEEDS REGUL ATIONS.

Subsection (c) of section 8005 of the Omnibus Budget Reconciliation Act of 1989 is amended by striking `1990' and inserting `1991'.

PART IV--CHILD WELFARE AND FOSTER CARE

SEC. 6040. CLARIFICATION OF TERMINOLOGY RELATING TO ADMINISTRATIVE CO STS.

(a) IN GENERAL- Paragraph (3) of section 474(a) (42 U.S.C. 674(a)(3 )) is amended by inserting `provision of child placement services and for the' b efore `proper and efficient'.

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall take effect on the date of the enactment of this Act.

SEC. 6041. SECTION 427 TRIENNIAL REVIEWS.

(a) AMENDMENTS TO SECTION 10406 OF OBRA 1989- Section 10406 of the Omnibus Budget Reconciliation Act of 1989 (42 U.S.C. 627 note) is amended--

(1) by striking `1991' and inserting `1992';

(2) by striking `1990' and inserting `1991'; and

(3) in the section heading, by striking `1990' and inserting `1 991'.

(b) CONFORMING AMENDMENT- The item relating to section 10406 in the table of contents appearing immediately after section 10000 of such Act is amen ded by striking `1990' and inserting `1991'.

SEC. 6042. INDEPENDENT LIVING INITIATIVES.

(a) IN GENERAL- Subparagraph (C) of section 477(a)(2) (42 U.S.C. 67 7(a)(2)) is amended--

(1) by inserting `who has not attained age 21' after `may at th e option of the State also include any child'; and

(2) by striking `, but such child' and all that follows through `care'.

(b) EFFECTIVE DATE- The amendments made by subsection (a) shall app ly to payments made under part E of title IV of the Social Security Act for fisc al years beginning with fiscal year 1991.

SEC. 6043. GRANTS TO STATES FOR CHILD CARE.

(a) RULES GOVERNING PROVISION OF CHILD CARE TO ELIGIBLE FAMILIES- S ection 402 (42 U.S.C. 602) is amended by adding at the end the following:
`(i)(1) Each State agency may, to the extent that it determines tha t resources are available, provide child care in accordance with paragraph (2) t o any low income family that the State determines is not eligible for aid under the State plan approved under this part, needs such care in order to work, and w ould be at risk of becoming eligible for aid under the State plan approved under this part if such care were not provided.

`(2) The State agency may provide child care pursuant to paragraph (1) by--

`(A) providing such care directly;

`(B) arranging such care through providers by use of purchase o f service contracts or vouchers;

`(C) providing cash or vouchers in advance to the caretaker rel ative in the family;

`(D) reimbursing the caretaker relative in the family; or< /ul>

`(E) adopting such other arrangements as the agency deems appro priate.

`(3)(A) A family provided with child care under paragraph (1) shall contribute to such care in accordance with a sliding scale formula established by the State agency based on the family's ability to pay.

`(B) The State agency shall make payment for the cost of child care provided under paragraph (1) with respect to a family in an amount that is the lesser of--

`(i) the actual cost of such care; and

`(ii) the applicable local market rate (as determined by the St ate in accordance with regulations issued by the Secretary).

`(4) The value of any child care provided or arranged (or any amoun t received as payment for such care or reimbursement for costs incurred for the care) under this subsection--

`(A) shall not be treated as income or as a deductible expense for purposes of any other Federal or federally assisted program that bases eligi bility for or amount of benefits upon need; and

`(B) may not be claimed as an employment-related expense for pu rposes of the credit under section 21 of the Internal Revenue Code of 1986.

`(5) Amounts expended by the State agency for child care under para graph (1) shall be treated as amounts for which payment may be made to a State u nder section 403(n) only to the extent that--

`(A) such amounts are, subject to paragraph (3)(B), within such limits as the State may prescribe;

`(B) the care involved meets applicable standards of State and local law; and

`(C) the entity providing the care allows parental access.

`(6)(i) Each State shall prepare reports annually, beginning with f iscal year 1993, on the activities of the State carried out with funds made avai lable under section 403(n).

`(ii) The State shall make copies of each report required by this p aragraph available for public inspection within the State, shall transmit a copy of each such report to the Secretary, and shall provide a copy of each such rep ort, on request, to any interested public agency.

`(iii) The Secretary shall annually compile the State reports trans mitted to the Secretary pursuant to clause (ii), and submit such annual compilat ion to the Congress.

`(B) Each report prepared and transmitted by a State under subparag raph (A) shall set forth with respect to child care services funded under sectio n 403(n)--

`(i) showing separately for center-based child care services, g roup home child care services, family child care services, and relative care ser vices the number of children who received such services, and the average cost of such services;

`(ii) the criteria applied in determining eligibility or priori ty for receiving services, and sliding fee schedules;

`(iii) the child care licensing and regulatory (including regis tration) requirements in effect in the State with respect to each type of servic e specified in clause (i); and

`(iv) the enforcement policies and practices in effect in the S tate which apply to licensed and regulated child care providers (including provi ders required to register).

`(C) Within 12 months after the date of the enactment of this subse ction, the Secretary shall establish uniform reporting requirements for use by t he States in preparing the information required by this paragraph, and make such other provision as may be necessary or appropriate to ensure that compliance wi th this subsection will not be unduly burdensome on the States.

`(D) The Secretary shall issue an interim report on the matters des cribed in subparagraphs (A) and (B) with respect to fiscal year 1992, based on i nformation made available by the States.

(b) PAYMENTS TO STATES- Section 403 (42 U.S.C. 603) is amended by a dding at the end the following:

`(n)(1) In addition to any payment under subsection (a) or (l), eac h State shall be entitled to payment from the Secretary of an amount equal to th e lesser of--

`(A) the Federal medical assistance percentage (as defined in s ection 1905(b)) of the expenditures by the State in providing child care pursuan t to section 402(i) for any fiscal year; and

`(B) the amount determined under paragraph (2) with respect to the State for the fiscal year.

`(2)(A) The limitation determined under this paragraph with respect to a State for any fiscal year is the amount that bears the same ratio to the a mount specified in subparagraph (B) for such fiscal year as the number of childr en residing in the State in the second preceding fiscal year bears to the number of children residing in the United States in the second preceding fiscal year.

`(B) The amount specified in this subparagraph is--

`(i) $65,000,000 for fiscal year 1991;

`(ii) $65,000,000 for fiscal year 1992;

`(iii) $65,000,000 for fiscal year 1993;

`(iv) $65,000,000 for fiscal year 1994; and

`(v) $65,000,000 for fiscal year 1995, and for each fiscal year thereafter.'.

(c) INCREASE AND EXTENSION OF GRANTS TO STATES TO IMPROVE CHILD CAR E LICENSING AND REGISTRATION REQUIREMENTS, AND TO MONITOR CHILD CARE PROVIDED TO CHILDREN RECEIVING AFDC- Section 402(g)(6)(D) (42 U.S.C. 602(g)(6)(D)) is amend ed by inserting `, and $35,000,000 for each of fiscal years 1992, 1993, and 1994 ' before the period.

(e) COORDINATION WITH OTHER PROGRAMS FOR CHILDREN- Section 402(g)(7 ) (42 U.S.C. 602(g)(7)) is amended by inserting `and subsection (i)' after `this subsection'.

(f) EFFECTIVE DATE- Except as otherwise expressly provided, the ame ndments made by this section shall take effect on October 1, 1990.

PART V--OLD-AGE, SURVIVORS, AND DISABILITY INSURANCE
SEC. 6050. CONTINUATION OF DISABILITY BENEFITS DURING APPEAL.
Subsection (g) of section 223 (42 U.S.C. 423(g)) is amended--< /ul>
(1) in paragraph (1)(i), in the matter following subparagraph ( C), by inserting `or' after `hearing,', and by striking `pending, or (iii) June 1991.' and inserting `pending.'; and

(2) by striking paragraph (3).

SEC. 6051. REPEAL OF SPECIAL DISABILITY STANDARD FOR WIDOWS AND WIDOW ERS.

(a) IN GENERAL- Section 223(d)(2) (42 U.S.C. 423(d)(2)) is amended- -

(1) in subparagraph (A), by striking `(except a widow, survivin g divorced wife, widower, or surviving divorced husband for purposes of section 202(e) or (f))';

(2) by striking subparagraph (B); and

(3) by redesignating subparagraph (C) as subparagraph (B).

(b) CONFORMING AMENDMENTS-

(1) The third sentence of section 216(i)(1) (42 U.S.C. 416(i)(1 )) is amended by striking `(2)(C)' and inserting `(2)(B)'.

(2) Section 223(f)(1)(B) (42 U.S.C. 423(f)(1)(B)) is amended to read as follows:

`(B) the individual is now able to engage in substantial ga inful activity; or'.

(3) Section 223(f)(2)(A)(ii) of such Act (42 U.S.C. 423(f)(2)(A )(ii)) is amended to read as follows:

`(ii) the individual is now able to engage in substanti al gainful activity, or'.

(4) Section 223(f)(3) of such Act (42 U.S.C. 423(f)(3)) is amen ded by striking `therefore--' and all that follows and inserting `therefore the individual is able to engage in substantial gainful activity; or'.

(5) Section 223(f) of such Act is further amended, in the matte r following paragraph (4), by striking `(or gainful activity in the case of a wi dow, surviving divorced wife, widower, or surviving divorced husband)' each plac e it appears.

(c) TRANSITIONAL RULES RELATING TO MEDICAID AND MEDICARE ELIGIBILIT Y-

(1) DETERMINATION OF MEDICAID ELIGIBILITY- Section 1634(d) (42 U.S.C. 1383c(d)) is amended--

(A) by redesignating paragraphs (1) and (2) as subparagraph s (A) and (B), respectively;

(B) by striking `(d) If any person--' and inserting `(d)(1) This subsection applies with respect to any person who--';

(C) in subparagraph (A) (as redesignated), by striking `as required' and all that follows through `but not entitled' and inserting `being t hen not entitled';

(D) in subparagraph (B) (as redesignated), by striking the comma at the end and inserting a period; and

(E) by striking `such person shall' and all that follows an d inserting the following new paragraph:

`(2) For purposes of title XIX, each person with respect to whom th is subsection applies--

`(A) shall be deemed to be a recipient of supplemental security income benefits under this title if such person received such a benefit for the month before the month in which such person began to receive a benefit describe d in paragraph (1)(A), and

`(B) shall be deemed to be a recipient of State supplementary p ayments of the type referred to in section 1616(a) of this Act (or payments of t he type described in section 212(a) of Public Law 93-66) which are paid by the S ecretary under an agreement referred to in such section 1616(a) (or in section 2 12(b) of Public Law 93-66) if such person received such a payment for the month before the month in which such person began to receive a benefit described in pa ragraph (1)(A),

for so long as such person (i) would be eligible for such supplementa l security income benefits, or such State supplementary payments, in the absence of benefits described in paragraph (1)(A), and (ii) is not entitled to hospital insurance benefits under part A of title XVIII.'.

(2) INCLUSION OF MONTHS OF SSI ELIGIBILITY WITHIN 5-MONTH DISAB ILITY WAITING PERIOD AND 24-MONTH MEDICARE WAITING PERIOD-

(A) WIDOW'S BENEFITS BASED ON DISABILITY- Section 202(e)(5) (42 U.S.C. 402(e)(5)) is amended--

(i) in subparagraph (B), by striking `(i)' and `(ii)' a nd inserting `(I)' and `(II)', respectively;

(ii) by redesignating subparagraphs (A) and (B) as clau ses (i) and (ii), respectively;

(iii) by inserting `(A)' after `(5)'; and

(iv) by adding at the end the following new subparagrap h:

`(B) For purposes of paragraph (1)(F)(i), each month in the period commencing with the first month for which such widow or surviving divorced wife is first eligible for supplemental security income benefits under title XVI, or State supplementary payments of the type referred to in section 1616(a) (or paym ents of the type described in section 212(a) of Public Law 93-66) which are paid by the Secretary under an agreement referred to in section 1616(a) (or in secti on 212(b) of Public Law 93-66), shall be included as one of the months of such w aiting period for which the requirements of subparagraph (A) have been met.'.

(B) WIDOWER'S BENEFITS BASED ON DISABILITY- Section 202(f)( 6) (42 U.S.C. 402(f)(6)) is amended--

(i) in subparagraph (B), by striking `(i)' and `(ii)' a nd inserting `(I)' and `(II)', respectively;

(ii) by redesignating subparagraphs (A) and (B) as clau ses (i) and (ii), respectively;

(iii) by inserting `(A)' after `(6)'; and

(iv) by adding at the end the following new subparagrap h:

`(B) For purposes of paragraph (1)(F)(i), each month in the period commencing with the first month for which such widower or surviving divorced hus band is first eligible for supplemental security income benefits under title XVI , or State supplementary payments of the type referred to in section 1616(a) (or payments of the type described in section 212(a) of Public Law 93-66) which are paid by the Secretary under an agreement referred to in section 1616(a) (or in section 212(b) of Public Law 93-66), shall be included as one of the months of s uch waiting period for which the requirements of subparagraph (A) have been met. '.

(C) MEDICARE BENEFITS- Section 226(e)(1) (42 U.S.C. 426(e)( 1)) is amended--

(i) by redesignating subparagraphs (A) and (B) as claus es (i) and (ii), respectively;

(ii) by inserting `(A)' after `(e)(1)'; and

(iii) by adding at the end the following new subparagra ph:

`(B) For purposes of subsection (b)(2)(A)(iii), each month in the p eriod commencing with the first month for which an individual is first eligible for supplemental security income benefits under title XVI, or State supplementar y payments of the type referred to in section 1616(a) of this Act (or payments o f the type described in section 212(a) of Public Law 93-66) which are paid by th e Secretary under an agreement referred to in section 1616(a) (or in section 212 (b) of Public Law 93-66), shall be included as one of the 24 months for which su ch individual must have been entitled to widow's or widower's insurance benefits on the basis of disability in order to become entitled to hospital insurance be nefits on that basis.'.

(d) DEEMED DISABILITY FOR PURPOSES OF ENTITLEMENT TO WIDOW'S AND WI DOWER'S INSURANCE BENEFITS FOR WIDOWS AND WIDOWERS ON SSI ROLLS-

(1) WIDOW'S INSURANCE BENEFITS- Section 202(e) (42 U.S.C. 402(e )) is amended by adding at the end the following new paragraph:

`(9) An individual shall be deemed to be under a disability for pur poses of paragraph (1)(B)(ii) if such individual is eligible for supplemental se curity income benefits under title XVI, or State supplementary payments of the t ype referred to in section 1616(a) (or payments of the type described in section 212(a) of Public Law 93-66) which are paid by the Secretary under an agreement referred to in section 1616(a) (or in section 212(b) of Public Law 93-66), for t he month for which all requirements of paragraph (1) for entitlement to benefits under this subsection (other than being under a disability) are met.'.

(2) WIDOWER'S INSURANCE BENEFITS- Section 202(f) (42 U.S.C. 402 (f)) is amended by adding at the end the following new paragraph:

`(9) An individual shall be deemed to be under a disability for pur poses of paragraph (1)(B)(ii) if such individual is eligible for supplemental se curity income benefits under title XVI, or State supplementary payments of the t ype referred to in section 1616(a) (or payments of the type described in section 212(a) of Public Law 93-66) which are paid by the Secretary under an agreement referred to in such section 1616(a) (or in section 212(b) of Public Law 93-66), for the month for which all requirements of paragraph (1) for entitlement to ben efits under this subsection (other than being under a disability) are met.'.

(e) EFFECTIVE DATE-

(1) IN GENERAL- The amendments made by this section (other than paragraphs (1) and (2)(C) of subsection (c)) shall apply with respect to monthl y insurance benefits for months after December 1990 for which applications are f iled on or after January 1, 1991, or are pending on such date. The amendments ma de by subsection (c)(1) shall apply with respect to medical assistance provided after December 1990. The amendments made by subsection (c)(2)(C) shall apply wit h respect to items and services furnished after December 1990.

(2) APPLICATION REQUIREMENTS FOR CERTAIN INDIVIDUALS ON BENEFIT ROLLS- In the case of any individual who--

(A) is entitled to disability insurance benefits under sect ion 223 of the Social Security Act for December 1990 or is eligible for suppleme ntal security income benefits under title XVI of such Act, or State supplementar y payments of the type referred to in section 1616(a) of such Act (or payments o f the type described in section 212(a) of Public Law 93-66) which are paid by th e Secretary under an agreement referred to in such section 1616(a) (or in sectio n 212(b) of Public Law 93-66), for January 1991,

(B) applied for widow's or widower's insurance benefits und er subsection (e) or (f) of section 202 of the Social Security Act during 1990, and

(C) is not entitled to such benefits under such subsection (e) or (f) for any month on the basis of such application by reason of the defin ition of disability under section 223(d)(2)(B) of the Social Security Act (as in effect immediately before the date of the enactment of this Act), and would hav e been so entitled for such month on the basis of such application if the amendm ents made by this section had been applied with respect to such application,

for purposes of determining such individual's entitlement to such benefits under subsection (e) or (f) of section 202 of the Social Security Act for months after December 1990, the requirement of paragraph (1)(C)(i) of such s ubsection shall be deemed to have been met.

SEC. 6052. DEPENDENCY REQUIREMENTS APPLICABLE TO A CHILD ADOPTED BY A SURVIVING SPOUSE.

(a) IN GENERAL- Section 216(e) (42 U.S.C. 416(e)) is amended in the second sentence--

(1) by striking `at the time of such individual's death living in such individual's household' and inserting `either living with or receiving a t least one-half of his support from such individual at the time of such individ ual's death'; and

(2) by striking `; except' and all that follows and inserting a period.

(b) EFFECTIVE DATE- The amendments made by this section shall apply with respect to benefits payable for months after December 1990, but only on th e basis of applications filed after December 31, 1990.

SEC. 6053. REPRESENTATIVE PAYEE REFORMS.

(a) IMPROVEMENTS IN THE REPRESENTATIVE PAYEE SELECTION AND RECRUITM ENT PROCESS-

(1) AUTHORITY FOR CERTIFICATION OF PAYMENTS TO REPRESENTATIVE P AYEES-

(A) TITLE II- Section 205(j)(1) (42 U.S.C. 405(j)) is amend ed to read as follows:

`Representative Payees

`(j)(1) If the Secretary determines that the interest of any indivi dual under this title would be served thereby, certification of payment of such individual's benefit under this title may be made, regardless of the legal compe tency or incompetency of the individual, either for direct payment to the indivi dual, or for his or her use and benefit, to another individual or organization w ith respect to whom the requirements of paragraph (2) have been met (hereinafter in this subsection referred to as the individual's `representative payee'). If the Secretary or a court of competent jurisdiction determines that a representat ive payee has misused any individual's benefit paid to such representative payee pursuant to this subsection or section 1631(a)(2), the Secretary shall promptly revoke certification for payment of benefits to such representative payee pursu ant to this subsection and certify payment to an alternate representative payee or to the individual.'.

(B) TITLE XVI-

(i)INGENERAL- Section 1631(a)(2)(A) (42 U.S.C. 1383(a)( 2)(A)) is amended to read as follows:

`(A)(i) Payments of the benefit of any individual may be made to an y such individual or to the eligible spouse (if any) of such individual or partl y to each.

`(ii) Upon a determination by the Secretary that the interest of su ch individual would be served thereby, or in the case of any individual or eligi ble spouse referred to in section 1611(e)(3)(A), such payments shall be made, re gardless of the legal competency or incompetency of the individual or eligible s pouse, to another individual who, or to a qualified organization (as defined in subparagraph (D)(ii)) which, is interested in or concerned with the welfare of s uch individual and with respect to whom the requirements of subparagraph (B) hav e been met (in this paragraph referred to as such individual's `representative p ayee') for the use and benefit of the individual or eligible spouse.

`(iii) If the Secretary or a court of competent jurisdiction determ ines that the representative payee of an individual or eligible spouse has misus ed any benefits which have been paid to the representative payee pursuant to cla use (ii) or section 205(j)(1), the Secretary shall promptly terminate payment of benefits to the representative payee pursuant to this subparagraph, and provide for payment of benefits to the individual or eligible spouse or to an alternati ve representative payee of the individual or eligible spouse.'.

(ii) CONFORMING AMENDMENTS- Section 1631(a)(2)(C) (42 U .S.C. 1383(a)(2)(C)) is amended--

(I) in clause (i), by striking `a person other than the individual or spouse entitled to such payment' and inserting `representativ e payee of an individual or spouse';

(II) in clauses (ii), (iii), and (iv), by striking `other person to whom such payment is made' each place it appears and inserting `representative payee'; and

(III) in clause (v)--

(aa) by striking `person receiving payments on behalf of anothe r' and inserting `representative payee'; and
(bb) by striking `person receiving such payments' and inserting `representative payee'.
(2) PROCEDURE FOR SELECTING REPRESENTATIVE PAYEES-

(A) IN GENERAL-

(i) TITLE II- Section 205(j)(2) (42 U.S.C. 405(j)(2)) i s amended to read as follows:

`(2)(A) Any certification made under paragraph (1) for payment of b enefits to an individual's representative payee shall be made on the basis of--

`(i) an investigation by the Secretary of the person to serve a s representative payee, which shall be conducted in advance of such certificatio n and shall, to the extent practicable, include a face-to-face interview with th e person to serve as representative payee, and

`(ii) adequate evidence that such certification is in the inter est of such individual (as determined by the Secretary in regulations).

`(B)(i) As part of the investigation referred to in subparagraph (A )(i), the Secretary shall--

`(I) require the person being investigated to submit documented proof of the identity of such person, unless information establishing such iden tity has been submitted with an application for benefits under this title or tit le XVI,

`(II) verify such person's social security account number (or e mployer identification number),

`(III) determine whether such person has been convicted of a vi olation of section 208 or 1632, and

`(IV) determine whether certification of payment of benefits to such person has been revoked pursuant to this subsection or payment of benefits to such person has been terminated pursuant to section 1631(a)(2)(A)(iii) by re ason of misuse of funds paid as benefits under this title or title XVI.

`(ii) The Secretary shall establish and maintain 2 centralized file s, which shall be updated periodically and which shall be in a form which render s them readily retrievable by each servicing office of the Social Security Admin istration. Such files shall consist of--

`(I) a list of the names and social security account numbers (o r employer identification numbers) of all persons with respect to whom certifica tion of payment of benefits has been revoked on or after January 1, 1991, pursua nt to this subsection, or with respect to whom payment of benefits has been term inated on or after such date pursuant to section 1631(a)(2), by reason of misuse of funds paid as benefits under this title or title XVI, and

`(II) a list of the names and social security account numbers ( or employer identification numbers) of all persons who have been convicted of a violation of section 208, 1107(a), 1128B, or 1632.

`(C)(i) Benefits of an individual may not be certified for payment to any other person pursuant to this subsection if--

`(I) such person has previously been convicted as described in subparagraph (B)(i)(III),

`(II) except as provided in clause (ii), certification of payme nt of benefits to such person under this subsection has previously been revoked as described in subparagraph (B)(i)(IV), or payment of benefits to such person p ursuant to section 1631(a)(2)(A)(ii) has previously been terminated as described in section 1631(a)(2)(B)(ii)(IV), or

`(III) except as provided in clause (iii), such person is a cre ditor of such individual who provides such individual with goods or services for consideration.

`(ii) The Secretary shall prescribe regulations under which the Sec retary may grant exemptions to any person from the provisions of clause (i)(II) on a case-by-case basis if such exemption is in the best interest of the individ ual whose benefits would be paid to such person pursuant to this subsection.

`(iii) Clause (i)(III) shall not apply with respect to any person w ho is a creditor referred to therein if such creditor is--

`(I) a relative of such individual if such relative resides in the same household as such individual,

`(II) a legal guardian or legal representative of such individu al,

`(III) a facility that is licensed or certified as a care facil ity under the law of a State or a political subdivision of a State,

`(IV) a person who is an administrator, owner, or employee of a facility referred to in subclause (III) if such individual resides in such faci lity, and the certification of payment to such facility or such person is made o nly after good faith efforts have been made by the local servicing office of the Social Security Administration to locate an alternative representative payee to whom such certification of payment would serve the best interests of such indiv idual, or

`(V) an individual who is determined by the Secretary, on the b asis of written findings and under procedures which the Secretary shall prescrib e by regulation, to be acceptable to serve as a representative payee.
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`(iv) The procedures referred to in clause (iii)(V) shall require t he individual who will serve as representative payee to establish, to the satisf action of the Secretary, that--

`(I) such individual poses no risk to the beneficiary,

`(II) the financial relationship of such individual to the bene ficiary poses no substantial conflict of interest, and

`(III) no other more suitable representative payee can be found .

`(D)(i) Subject to clause (ii), if the Secretary makes a determinat ion described in the first sentence of paragraph (1) with respect to any individ ual's benefit and determines that direct payment of the benefit to the individua l would cause substantial harm to the individual, the Secretary may defer (in th e case of initial entitlement) or suspend (in the case of existing entitlement) direct payment of such benefit to the individual, until such time as the selecti on of a representative payee is made pursuant to this subsection.

`(ii)(I) Except as provided in subclause (II), any deferral or susp ension of direct payment of a benefit pursuant to clause (i) shall be for a peri od of not more than 1 month.

`(II) Subclause (I) shall not apply in any case in which the indivi dual is, as of the date of the Secretary's determination, legally incompetent or under the age of 15.

`(iii) Payment pursuant to this subsection of any benefits which ar e deferred or suspended pending the selection of a representative payee shall be made to the individual or the representative payee as a single sum or over such period of time as the Secretary determines is in the best interest of the indiv idual entitled to such benefits.

`(E)(i) Any individual who is dissatisfied with a determination by the Secretary to certify payment of such individual's benefit to a representativ e payee under paragraph (1) or with the designation of a particular person to se rve as representative payee shall be entitled to a hearing by the Secretary to t he same extent as is provided in subsection (b), and to judicial review of the S ecretary's final decision as is provided in subsection (g).

`(ii) In advance of the certification of payment of an individual's benefit to a representative payee under paragraph (1), the Secretary shall prov ide written notice of the Secretary's initial determination to certify such paym ent. Such notice shall be provided to such individual, except that, if such indi vidual--

`(I) is under the age of 15,

`(II) is an unemancipated minor under the age of 18, or

`(III) is legally incompetent,

then such notice shall be provided solely to the legal guardian or le gal representative of such individual.

`(iii) Any such notice shall be clearly written in language that is easily understandable to the reader, shall identify the person to be designated as such individual's representative payee, and shall explain to the reader the right under clause (i) of such individual or such individual's legal guardian or legal representative--

`(I) to appeal a determination that a representative payee is n ecessary for such individual,

`(II) to appeal the designation of a particular person to serve as the representative payee of such individual, and

`(III) to review the evidence upon which such designation is ba sed and submit additional evidence.'.

(ii) TITLE XVI- Section 1631(a)(2)(B) (42 U.S.C. 1383(a )(2)(B)) is amended to read as follows:

`(B)(i) Any provision made under subparagraph (A) for payment of be nefits to the representative payee of an individual or eligible spouse shall be made on the basis of--

`(I) an investigation by the Secretary of the person to serve a s representative payee, which shall be conducted before such payment, and shall, to the extent practicable, include a face-to-face interview with the person; an d

`(II) adequate evidence that such payment is in the interest of the individual or eligible spouse (as determined by the Secretary in regulation s).

`(ii) As part of the investigation referred to in clause (i)(I), th e Secretary shall--

`(I) require the person being investigated to submit documented proof of the identity of such person, unless information establishing such iden tity was submitted with an application for benefits under title II or this title ;

`(II) verify the social security account number (or employer id entification number) of such person;

`(III) determine whether such person has been convicted of a vi olation of section 208 or 1632; and

`(IV) determine whether payment of benefits to such person has been terminated pursuant to subparagraph (A)(ii)(II), and whether certification of payment of benefits to such person has been revoked pursuant to section 205(j ), by reason of misuse of funds paid as benefits under title II or this title.

`(iii) Benefits of an individual may not be paid to any other perso n pursuant to subparagraph (A)(ii) if--

`(I) such person has previously been convicted as described in clause (ii)(III);

`(II) except as provided in clause (iv), payment of benefits to such person pursuant to subparagraph (A)(ii) has previously been terminated as described in clause (ii)(IV), or certification of payment of benefits to such pe rson under section 215(j) has previously been revoked as described in section 21 5(j)(2)(B)(i)(IV); or

`(III) except as provided in clause (v), such person is a credi tor of the individual who provides the individual with goods or services for con sideration.

`(iv) The Secretary shall prescribe regulations under which the Sec retary may grant an exemption from clause (iii)(II) to any person on a case-by-c ase basis if such exemption would be in the best interest of the individual or e ligible spouse whose benefits under this title would be paid to such person purs uant to subparagraph (A)(ii).

`(v) Clause (iii)(III) shall not apply to any person who is a credi tor of the individual if the creditor is--

`(I) a relative of the individual if such relative resides in t he same household as such individual;

`(II) a legal guardian or legal representative of the individua l;

`(III) a facility that is licensed or certified as a care facil ity under the law of a State or a political subdivision of a State;

`(IV) a person who is an administrator, owner, or employee of a facility referred to in subclause (III) if the individual resides in the facili ty, and the payment of benefits under this title to the facility or the person i s made only after good faith efforts have been made by the local servicing offic e of the Social Security Administration to locate an alternative representative payee to whom the payment of such benefits would serve the best interests of the individual; or

`(V) an individual who is determined by the Secretary, on the b asis of written findings and under procedures which the Secretary shall prescrib e by regulation, to be acceptable to serve as a representative payee.
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`(vi) The procedures referred to in clause (v)(V) shall require the individual who will serve as representative payee to establish, to the satisfac tion of the Secretary, that--

`(I) such individual poses no risk to the beneficiary;

`(II) the financial relationship of such individual to the bene ficiary poses no substantial conflict of interest; and

`(III) no other more suitable representative payee can be found .

`(vii) Subject to clause (viii), if the Secretary makes a determina tion described in subparagraph (A)(ii) with respect to any individual's benefit and determines that direct payment of the benefit to the individual would cause substantial harm to the individual, the Secretary may defer (in the case of init ial entitlement) or suspend (in the case of existing entitlement) direct payment of such benefit to the individual, until such time as the selection of a repres entative payee is made pursuant to this subparagraph.

`(viii)(I) Except as provided in subclause (I), any deferral or sus pension of direct payment of a benefit pursuant to clause (vii) shall be for a p eriod of not more than 1 month.

`(II) Clause (I) shall not apply in any case in which the indiv idual or eligible spouse is, as of the date of the Secretary's determination, le gally incompetent or under the age 15 years.

`(ix) Payment pursuant to this subparagraph of any benefits which a re deferred or suspended pending the selection of a representative payee shall b e made--

`(I) to the representative payee upon such selection; and< /ul>

`(II) as a single payment, or over such period as the Secretary determines is in the best interests of the individual entitled to such benefits .

`(x) Any individual who is dissatisfied with a determination by the Secretary under subparagraph (A)(ii) to pay such individual's benefits under th is title to a representative payee, or with the selection of a particular person to be the representative payee of the individual, shall be entitled to a hearin g by the Secretary, and to judicial review of the Secretary's final decision, to the same extent as is provided in subsection (c).

`(xi) Before the first payment of an individual's benefit to a repr esentative payee under subparagraph (A)(ii), the Secretary shall provide written notice of the Secretary's initial determination to so make the payment. Such no tice shall be provided to--

`(I) the legal guardian or legal representative of the individu al, if the individual has not attained the age of 15 years, is an unemancipated minor who has not attained the age of 18 years, or is legally incompetent; or

`(II) the individual, in any other case.

`(xii) Any notice referred to in clause (xi) shall be clearly writt en in language that is easily understandable to the reader, identify the person selected to be the representative payee of the individual, and explain to the re ader the right under clause (x) of the individual or the legal guardian or legal representative of the individual--

`(I) to appeal a determination that a representative payee is n ecessary for the individual;

`(II) to appeal the selection of a particular person to be the representative payee of the individual; and

`(III) to review the evidence upon which the selection is based and submit additional evidence.'.

(B) REPORT ON FEASIBILITY OF OBTAINING READY ACCESS TO CERT AIN CRIMINAL FRAUD RECORDS- As soon as practicable after the date of the enactme nt of this Act, the Secretary of Health and Human Services, in consultation with the Attorney General of the United States and the Secretary of the Treasury, sh all study the feasibility of establishing and maintaining a current list, which would be readily available to local offices of the Social Security Administratio n for use in investigations undertaken pursuant to section 205(j)(2) or 1631(a)( 2)(B) of the Social Security Act, of the names and social security account numbe rs of individuals who have been convicted of a violation of section 495 of title 18, United States Code. The Secretary of Health and Human Services shall, not l ater than July 1, 1992, submit the results of such study, together with any reco mmendations, to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate.

(3) PROVISION FOR COMPENSATION OF QUALIFIED ORGANIZATIONS SERVI NG AS REPRESENTATIVE PAYEES-

(A) IN GENERAL-

(i) TITLE II- Section 205(j) (42 U.S.C. 405(j)) is amen ded by redesignating paragraph (4) as paragraph (5), and by inserting after para graph (3) the following new paragraph:

`(4)(A) A qualified organization may collect from an individual a m onthly fee for expenses (including overhead) incurred by such organization in pr oviding services performed as such individual's representative payee pursuant to this subsection if such fee does not exceed the lesser of--

`(i) 10 percent of the monthly benefit involved, or

`(ii) $25.00 per month.

Any agreement providing for a fee in excess of the amount permitted u nder this subparagraph shall be void and shall be treated as misuse by such orga nization of such individual's benefits.

`(B) For purposes of this paragraph, the term `qualified organizati on' means any community-based nonprofit social service agency which is bonded or licensed in each State in which it serves as a representative payee and which, in accordance with any applicable regulations of the Secretary--

`(i) regularly provides services as the representative payee, p ursuant to this subsection or section 1631(a)(2), concurrently to 5 or more indi viduals,

`(ii) demonstrates to the satisfaction of the Secretary that su ch agency is not otherwise a creditor of any such individual, and

`(iii) was in existence on October 1, 1988.

`(C) Any qualified organization which knowingly charges or collects , directly or indirectly, any fee in excess of the maximum fee prescribed under subparagraph (A) or makes any agreement, directly or indirectly, to charge or co llect any fee in excess of such maximum fee, shall be fined in accordance with t itle 18, United States Code.

`(D) This paragraph shall cease to be effective on January 1, 1994. '.

(ii) TITLE XVI- Section 1631(a)(2) (42 U.S.C. 1383(a)(2 )) is amended--

(I) by redesignating subparagraph (D) as subparagra ph (E);

(III) by inserting after subparagraph (C) the follo wing:

`(D)(i) A qualified organization may collect from an individual a m onthly fee for expenses (including overhead) incurred by such organization in pr oviding services performed as such individual's representative payee pursuant to subparagraph (A)(ii) if the fee does not exceed the lesser of--

`(I) 10 percent of the monthly benefit involved, or

`(II) $25.00 per month.

Any agreement providing for a fee in excess of the amount permitted u nder this clause shall be void and shall be treated as misuse by the organizatio n of the individual's benefits under this title.

`(ii) For purposes of this subparagraph, the term `qualified organi zation' means any community-based nonprofit social service agency which--
`(I) is bonded or licensed in each State in which the agency se rves as a representative payee;

`(II) in accordance with any applicable regulations of the Secr etary--

`(aa) regularly provides services as a representative payee pursuant to subparagraph (A)(ii) or section 205(j)(4) concurrently to 5 or more individuals;

`(bb) demonstrates to the satisfaction of the Secretary tha t such person is not otherwise a creditor of any such individual; and
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`(cc) was in existence on October 1, 1988.

`(iii) Any qualified organization which knowingly charges or collec ts, directly or indirectly, any fee in excess of the maximum fee prescribed unde r clause (i) or makes any agreement, directly or indirectly, to charge or collec t any fee in excess of such maximum fee, shall be fined in accordance with title 18, United States Code.

`(iv) This subparagraph shall cease to be effective on January 1, 1 994.'.

(B) STUDIES AND REPORTS-

(i) REPORT BY SECRETARY OF HEALTH AND HUMAN SERVICES- N ot later than January 1, 1993, the Secretary of Health and Human Services shall transmit a report to the Committee on Ways and Means of the House of Representat ives and the Committee on Finance of the Senate setting forth the number and typ es of qualified organizations which have served as representative payees and hav e collected fees for such service pursuant to any amendment made by subparagraph (A), and

(ii) REPORT BY COMPTROLLER GENERAL- Not later than July 1, 1992, the Comptroller General of the United States shall conduct a study of the advantages and disadvantages of allowing qualified organizations serving as representative payees to charge fees pursuant to the amendments made by subparag raph (A) and shall transmit a report to the Committee on Ways and Means of the H ouse of Representatives and the Committee on Finance of the Senate setting forth the results of such study.

(4) STUDY RELATING TO FEASIBILITY OF SCREENING OF INDIVIDUALS W ITH CRIMINAL RECORDS- As soon as practicable after the date of the enactment of this Act, the Secretary of Health and Human Services shall conduct a study of th e feasibility of determining the type of representative payee applicant most lik ely to have a felony or misdemeanor conviction, the suitability of individuals w ith prior convictions to serve as representative payees, and the circumstances u nder which such applicants could be allowed to serve as representative payees. T he Secretary shall transmit the results of such study to the Committee on Ways a nd Means of the House of Representatives and the Committee on Finance of the Sen ate not later than July 1, 1992.

(5) EFFECTIVE DATES-

(A) USE AND SELECTION OF REPRESENTATIVE PAYEES- The amendme nts made by paragraphs (1) and (2) shall take effect July 1, 1991, and shall app ly only with respect to--

(i) certifications of payment of benefits under title I I of the Social Security Act to representative payees made on or after such date ; and

(ii) provisions for payment of benefits under title XVI of such Act to representative payees made on or after such date.

(B) COMPENSATION OF REPRESENTATIVE PAYEES- The amendments m ade by paragraph (3) shall take effect January 1, 1992, and the Secretary of Hea lth and Human Services shall prescribe initial regulations necessary to carry ou t such amendments not later than such date.

(b) IMPROVEMENTS IN RECORDKEEPING AND AUDITING REQUIREMENTS- < /ul>
(1) IMPROVED ACCESS TO CERTAIN INFORMATION-

(A) IN GENERAL- Section 205(j)(3) (42 U.S.C. 605(j)(3)) is amended--

(i) by striking subparagraph (B);

(ii) by redesignating subparagraphs (C), (D), and (E) a s subparagraphs (B), (C), and (D), respectively;

(iii) in subparagraph (D) (as so redesignated), by stri king `(A), (B), (C), and (D)' and inserting `(A), (B), and (C)'; and

(iv) by adding at the end the following new subparagrap hs:

`(E) The Secretary shall maintain a centralized file, which shall b e updated periodically and which shall be in a form which will be readily retrie vable by each servicing office of the Social Security Administration, of--< /ul>
`(i) the address and the social security account number (or emp loyer identification number) of each representative payee who is receiving benef it payments pursuant to this subsection or section 1631(a)(2), and

`(ii) the address and social security account number of each in dividual for whom each representative payee is reported to be providing services as representative payee pursuant to this subsection or section 1631(a)(2).

`(F) Each servicing office of the Administration shall maintain a l ist, which shall be updated periodically, of public agencies and community-based nonprofit social service agencies which are qualified to serve as representativ e payees pursuant to this subsection or section 1631(a)(2) and which are located in the area served by such servicing office.'.

(B) EFFECTIVE DATE- The amendments made by subparagraph (A) shall take effect October 1, 1992, and the Secretary of Health and Human Servic es shall take such actions as are necessary to ensure that the requirements of s ection 205(j)(3)(E) of the Social Security Act (as amended by subparagraph (A) o f this paragraph) are satisfied as of such date.

(2) STUDY RELATING TO MORE STRINGENT OVERSIGHT OF HIGH-RISK REP RESENTATIVE PAYEES-

(A) IN GENERAL- As soon as practicable after the date of th e enactment of this Act, the Secretary of Health and Human Services shall conduc t a study of the need for a more stringent accounting system for high-risk repre sentative payees than is otherwise generally provided under section 205(j)(3) or 1631(a)(2)(C) of the Social Security Act, which would include such additional r eporting requirements, record maintenance requirements, and other measures as th e Secretary considers necessary to determine whether services are being appropri ately provided by such payees in accordance with such sections 205(j) and 1631(a )(2).

(B) SPECIAL PROCEDURES- In such study, the Secretary shall determine the appropriate means of implementing more stringent, statistically va lid procedures for--

(i) reviewing reports which would be submitted to the S ecretary under any system described in subparagraph (A), and

(ii) periodic, random audits of records which would be kept under such a system,

in order to identify any instances in which high-risk represe ntative payees are misusing payments made pursuant to section 205(j) or 1631(a)( 2) of the Social Security Act.

(C) HIGH-RISK REPRESENTATIVE PAYEE- For purposes of this pa ragraph, the term `high-risk representative payee' means a representative payee under section 205(j) or 1631(a)(2) of the Social Security Act (42 U.S.C. 405(j) and 1383(a)(2), respectively) (other than a Federal or State institution) who--

(i) regularly provides concurrent services as a represe ntative payee under such section 205(j), such section 1631(a)(2), or both such s ections, for 5 or more individuals who are unrelated to such representative paye e,

(ii) is neither related to an individual on whose behal f the payee is being paid benefits nor living in the same household with such in dividual,

(iii) is a creditor of such individual, or

(iv) is in such other category of payees as the Secreta ry may determine appropriate.

(D) REPORT- The Secretary shall report to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of t he Senate the results of the study, together with any recommendations, not later than July 1, 1992. Such report shall include an evaluation of the feasibility a nd desirability of legislation implementing stricter accounting and review proce dures for high-risk representative payees in all servicing offices of the Social Security Administration (together with proposed legislative language).

(3) DEMONSTRATION PROJECTS RELATING TO PROVISION OF INFORMATION TO LOCAL AGENCIES PROVIDING CHILD AND ADULT PROTECTIVE SERVICES-

(A) IN GENERAL- As soon as practicable after the date of th e enactment of this Act, the Secretary of Health and Human Services shall implem ent a demonstration project under this paragraph in all or part of not fewer tha n 2 States. Under each such project, the Secretary shall enter into an agreement with the State in which the project is located to make readily available, for t he duration of the project, to the appropriate State agency, a listing of addres ses of multiple benefit recipients.

(B) LISTING OF ADDRESSES OF MULTIPLE BENEFIT RECIPIENTS- Th e list referred to in subparagraph (A) shall consist of a current list setting f orth each address within the State at which benefits under title II, benefits un der title XVI, or any combination of such benefits are being received by 5 or mo re individuals. For purposes of this subparagraph, in the case of benefits under title II, all individuals receiving benefits on the basis of the wages and self -employment income of the same individual shall be counted as 1 individual.

(C) APPROPRIATE STATE AGENCY- The appropriate State agency referred to in subparagraph (A) is the agency of the State which the Secretary d etermines is primarily responsible for regulating care facilities operated in su ch State or providing for child and adult protective services in such State.

(D) REPORT- The Secretary shall report to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of t he Senate concerning such demonstration projects, together with any recommendati ons, not later than July 1, 1992. Such report shall include an evaluation of the feasibility and desirability of legislation implementing the programs establish ed pursuant to this paragraph on a permanent basis.

(E) STATE- For purposes of this paragraph, the term `State' means a State, including the entities included in such term by section 210(h) o f the Social Security Act (42 U.S.C. 410(h)).

(c) REPORTS TO THE CONGRESS-

(1) IN GENERAL-

(A) TITLE II- Section 205(j)(5) (as so redesignated by subs ection (a)(3)(A)(i) of this section) is amended to read as follows:

`(5) The Secretary shall include as a part of the annual report req uired under section 704 information with respect to the implementation of the pr eceding provisions of this subsection, including the number of cases in which th e representative payee was changed, the number of cases discovered where there h as been a misuse of funds, how any such cases were dealt with by the Secretary, the final disposition of such cases, including any criminal penalties imposed, a nd such other information as the Secretary determines to be appropriate.'.< /ul>
(B) TITLE XVI- Section 1631(a)(2)(E) (42 U.S.C. 1383(a)(2)( E)), as so redesignated by subsection (a)(3)(A)(ii)(I) of this section, is amend ed to read as follows:

`(E) The Secretary shall include as a part of the annual report req uired under section 704 information with respect to the implementation of the pr eceding provisions of this paragraph, including--

`(i) the number of cases in which the representative payee was changed;

`(ii) the number of cases discovered where there has been a misuse of funds;

`(iii) how any such cases were dealt with by the Secretary;

`(iv) the final disposition of such cases (including any cr iminal penalties imposed); and

`(v) such other information as the Secretary determines to be appropriate.'.

(2) EFFECTIVE DATE- The amendments made by paragraph (1) shall apply with respect to annual reports issued for years after 1991.

(3) FEASIBILITY STUDY REGARDING INVOLVEMENT OF DEPARTMENT OF VE TERANS AFFAIRS- As soon as practicable after the date of the enactment of this A ct, the Secretary of Health and Human Services, in cooperation with the Secretar y of Veterans Affairs, shall conduct a study of the feasibility of designating t he Department of Veterans Affairs as the lead agency for purposes of selecting, appointing, and monitoring representative payees for those individuals who recei ve benefits paid under title II or XVI of the Social Security Act and benefits p aid by the Department of Veterans Affairs. Not later than 180 days after the dat e of the enactment of this Act, the Secretary of Health and Human Services shall transmit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a report setting forth the results of su ch study, together with any recommendations.

SEC. 6054. FEES FOR REPRESENTATION OF CLAIMANTS IN ADMINISTRATIVE PRO CEEDINGS.

(a) IN GENERAL-

(1) TITLE ii- Subsection (a) of section 206 (42 U.S.C. 406(a)) is amended--

(A) by inserting `(1)' after `(a)';

(B) in the fifth sentence, by striking `Whenever' and inser ting `Except as provided in paragraph (2)(A), whenever'; and

(C) by striking the sixth sentence and all that follows thr ough `Any person who' in the seventh sentence and inserting the following:< /ul>

`(2)(A) In the case of a claim of entitlement to past-due benefits under this title, if--

`(i) an agreement between the claimant and another person regar ding any fee to be recovered by such person to compensate such person for servic es with respect to the claim is presented in writing to the Secretary prior to t he time of the Secretary's determination regarding the claim,

`(ii) the fee specified in the agreement does not exceed the le sser of--

`(I) 25 percent of the total amount of such past-due benefi ts (as determined before any applicable reduction under section 1127(a)), or

`(II) $4,000, and

`(iii) the determination is favorable to the claimant,

then the Secretary shall approve that agreement at the time of the fa vorable determination, and (subject to paragraph (3)) the fee specified in the a greement shall be the maximum fee. The Secretary may from time to time increase the dollar amount under clause (ii)(II) to the extent that the rate of increase in such amount, as determined over the period since January 1, 1991, does not at any time exceed the rate of increase in primary insurance amounts under section 215(i) since such date. The Secretary shall publish any such increased amount i n the Federal Register.

`(B) For purposes of this subsection, the term `past-due benefits' excludes any benefits with respect to which payment has been continued pursuant to section 223(g).

`(C) In the case of a claim with respect to which the Secretary has approved an agreement pursuant to subparagraph (A), the Secretary shall provide the claimant and the person representing the claimant a written notice of--

`(i) the dollar amount of the past-due benefits (as determined before any applicable reduction under section 1127(a)) and the dollar amount of the past-due benefits payable to the claimant,

`(ii) the dollar amount of the maximum fee which may be charged or recovered as determined under this paragraph, and

`(iii) a description of the procedures for review under paragra ph (3).

`(3)(A) The Secretary shall provide by regulation for review of the amount which would otherwise be the maximum fee as determined under paragraph ( 2) if, within 15 days after receipt of the notice provided pursuant to paragraph (2)(C)--

`(i) the claimant, or the administrative law judge or other adj udicator who made the favorable determination, submits a written request to the Secretary to reduce the maximum fee, or

`(ii) the person representing the claimant submits a written re quest to the Secretary to increase the maximum fee.

Any such review shall be conducted after providing the claimant, the person representing the claimant, and the adjudicator with reasonable notice of such request and an opportunity to submit written information in favor of or in opposition to such request. The adjudicator may request the Secretary to reduce the maximum fee only on the basis of evidence of the failure of the person repre senting the claimant to represent adequately the claimant's interest or on the b asis of evidence that the fee is clearly excessive for services rendered.
`(B)(i) In the case of a request for review under subparagraph (A) by the claimant or by the person representing the claimant, such review shall be conducted by the administrative law judge who made the favorable determination or, if the Secretary determines that such administrative law judge is unavailabl e or if the determination was not made by an administrative law judge, such revi ew shall be conducted by another person designated by the Secretary for such pur pose.

`(ii) In the case of a request by the adjudicator for review under subparagraph (A), the review shall be conducted by the Secretary or by an admini strative law judge or other person (other than such adjudicator) who is designat ed by the Secretary.

`(C) Upon completion of the review, the administrative law judge or other person conducting the review shall affirm or modify the amount which woul d otherwise be the maximum fee. Any such amount so affirmed or modified shall be considered the amount of the maximum fee which may be recovered under paragraph (2). The decision of the administrative law judge or other person conducting th e review shall not be subject to further review.

`(4)(A) Subject to subparagraph (B), if the claimant is determined to be entitled to past-due benefits under this title and the person representing the claimant is an attorney, the Secretary shall, notwithstanding section 205(i ), certify for payment out of such past-due benefits (as determined before any a pplicable reduction under section 1127(a)) to such attorney an amount equal to t he maximum fee, but not in excess of 25 percent of such past-due benefits (as de termined before any applicable reduction under section 1127(a)).

`(B) The Secretary shall not in any case certify any amount for pay ment to the attorney pursuant to this paragraph before the expiration of the 15- day period referred to in paragraph (3)(A) or, in the case of any review conduct ed under paragraph (3), before the completion of such review.

`(5) Any person who'.

(2) TITLE XVI- Paragraph (2)(A) of section 1631(d) (42 U.S.C. 1 383(d)(2)(A)) is amended to read as follows:

`(2)(A) The provisions of section 206(a) (other than paragraphs (2) (B) and (4) thereof) shall apply to this part to the same extent as they apply i n the case of title II, and in so applying such provisions `section 1631(g)' sha ll be substituted for `section 1127(a)'.'.

(b) PROTECTION OF ATTORNEY'S FEES FROM OFFSETTING SSI BENEFITS- Sub section (a) of section 1127 (42 U.S.C. 1320a-6(a)) is amended by adding at the e nd the following new sentence: `A benefit under title II shall not be reduced pu rsuant to the preceding sentence to the extent that any amount of such benefit w ould not otherwise be available for payment in full of the maximum fee which may be recov- ered from such benefit by an attorney pursuant to section 206(a)(4).' .

(c) LIMITATATION OF TRAVEL EXPENSES FOR REP- RESENTATION OF CLAIMAN TS AT ADMINISTRATIVE PROCEEDINGS- Section 201(j) (42 U.S.C. 401(j)), section 163 1(h) (42 U.S.C. 1383(h)), and section 1817(i) (42 U.S.C. 1395i(i)) are each amen ded by adding at the end the following new sentence: `The amount available for p ayment under this subsection for travel by a representative to attend an adminis trative proceeding before an administrative law judge or other adjudicator shall not exceed the maximum amount allowable under this subsection for such travel o riginating within the geographic area of the office having jurisdiction over suc h proceeding.'.

(d) EFFECTIVE DATE- The amendments made by this section shall apply with respect to determinations made on or after January 1, 1991, and to reimbur sement for travel expenses incurred on or after January 1, 1991.

SEC. 6055. APPLICABILITY OF ADMINISTRATIVE RES JUDICATA; RELATED NOTI CE REQUIREMENTS.

(a) IN GENERAL-

(1) TITLE II- Section 205(b) of the Social Security Act (42 U.S .C 405(b)) is amended by adding at the end the following new paragraph:

`(3)(A) A failure to timely request review of an initial advers e determination with respect to an application for any benefit under this title or an adverse determination on reconsideration of such an initial determination shall not serve as a basis for denial of a subsequent application for any benefi t under this title if the applicant demonstrates that the applicant, or any othe r individual referred to in paragraph (1), failed to so request such a review ac ting in good faith reliance upon incorrect, incomplete, or misleading informatio n, relating to the consequences of reapplying for benefits in lieu of seeking re view of an adverse determination, provided by any officer or employee of the Soc ial Security Administration or any State agency acting under section 221.

`(B) In any notice of an adverse determination with respect to whic h a review may be requested under paragraph (1), the Secretary shall describe in clear and specific language the effect on possible entitlement to benefits unde r this title of choosing to reapply in lieu of requesting review of the determin ation.'.

(2) TITLE XVI- Section 1631(c)(1) (42 U.S.C 1383(c)(1)) is amen ded--

(A) by inserting `(A)' after `(c)(1)'; and

(B) by adding at the end the following:

`(B)(A) A failure to timely request review of an initial adverse de termination with respect to an application for any payment under this title or a n adverse determination on reconsideration of such an initial determination shal l not serve as a basis for denial of a subsequent application for any payment un der this title if the applicant demonstrates that the applicant, or any other in dividual referred to in paragraph (1), failed to so request such a review acting in good faith reliance upon incorrect, incomplete, or misleading information, r elating to the consequences of reapplying for payments in lieu of seeking review of an adverse determination, provided by any officer or employee of the Social Security Administration.

`(B) In any notice of an adverse determination with respect to which a review may be requested under paragraph (1), the Secretary shall describe in cle ar and specific language the effect on possible entitlement to payments under th is title of choosing to reapply in lieu of requesting review of the determinatio n.'.
(b) EFFECTIVE DATE- The amendments made by this section shall apply with respect to adverse determinations made on or after January 1, 1991.
SEC. 6056. DEMONSTRATION PROJECTS RELATING TO ACCOUNTABILITY FOR TELE PHONE SERVICE CENTER COMMUNICATIONS.

(a) IN GENERAL- The Secretary of Health and Human Services shall de velop and carry out demonstration projects designed to implement the accountabil ity procedures described in subsection (b) in each of not fewer than 3 telephone service centers operated by the Social Security Administration. Telephone servi ce centers shall be selected for implementation of the accountability procedures as they would operate in conjunction with the service technology most recently employed by the Social Security Administration. Each such demonstration project shall commence not later than 180 days after the date of the enactment of this A ct and shall remain in operation for not less than 1 year and not more than 3 ye ars.

(b) ACCOUNTABILITY PROCEDURES-

(1) IN GENERAL- During the period of each dem- onstration proje ct developed and carried out by the Secretary of Health and Human Services with respect to a telephone service center pursuant to subsection (a), the Secretary shall provide for the application at such telephone service center of accountabi lity procedures consisting of the following:

(A) In any case in which a person communicates with the Soc ial Security Administration by telephone at such telephone service center and pr ovides in such communication his or her name, address, and such other identifyin g information as the Secretary determines necessary and appropriate for purposes of this subparagraph, the Secretary must thereafter promptly provide such perso n a written receipt which sets forth--

(i) the name of any individual representing the Social Security Administration with whom such person has spoken in such communication,

(ii) the date of the communication;

(iii) a description of the nature of the communication,

(iv) any action that an individual representing the Soc ial Security Administration has indicated in the communication will be taken in response to the communication, and

(v) a description of the information or advice offered in the communication by an individual representing the Social Security Administr ation.

(B) Such person must be notified during the communication b y an individual representing the Social Security Administration that, if adequat e identifying information is provided to the Administration, a receipt described in subparagraph (A) will be provided to such person.

(C) A copy of any receipt required to be provided to any pe rson under subparagraph (A) must be--

(i) included in the file maintained by the Social Secur ity Administration relating to such person, or

(ii) if there is no such file, otherwise retained by th e Social Security Administration in retrievable form until the end of the 5-year period following the termination of the project.

(2) EXCLUSION OF CERTAIN ROUTINE TELEPHONE COMMUNICATIONS- The Secretary may exclude from demonstration projects carried out pursuant to this section routine telephone communications which do not relate to potential or cur rent eligibility or entitlement to benefits.

(c) REPORT-

(1) IN GENERAL--The Secretary of Health and Human Services shal l submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a written report on the progress of the d emonstration projects conducted pursuant to this section, together with any rela ted data and materials which the Secretary may consider appropriate. The report shall be submitted not later than 90 days after the termination of the project.

(2) SPECIFIC MATTERS TO BE INCLUDED- The report required under paragraph (1) shall--

(A) assess the costs and benefits of the accountability pro cedures,

(B) identify any major difficulties encountered in implemen ting the demonstration project, and

(C) assess the feasibility of implementing the accountabil ity procedures on a national basis.

SEC. 6057. TELEPHONE ACCESS TO THE SOCIAL SECURITY ADMINISTRATION.

(a) REQUIRED MINIMUM LEVEL OF ACCESS TO LOCAL OFFICES- In addition to such other access by telephone to offices of the Social Security Administrati on as the Secretary of Health and Human Services may consider appropriate, the S ecretary shall maintain access by telephone to local offices of the Social Secur ity Administration at the level of access generally available as of September 30 , 1989.

(b) TELEPHONE LISTINGS- The Secretary shall make such requests of l ocal telephone utilities in the United States as are necessary to ensure that th e listings subsequently maintained and published by such utilities for each loca lity include the address and telephone number for each local office of the Socia l Security Administration to which direct telephone access is maintained under s ubsection (a) in such locality. Such listing may also include information concer ning the availability of a toll-free number which may be called for general info rmation.

(c) REPORT BY SECRETARY- Not later than January 1, 1993, the Secret ary shall submit to the Committee on Ways and Means of the House of Representati ves and the Committee on Finance of the Senate a report which--

(1) assesses the impact of the requirements established by this section on the Social Security Administration's allocation of resources, worklo ad levels, and service to the public, and

(2) presents a plan for using new, innovative technologies to e nhance access to the Social Security Administration, including access to local o ffices.

(d) GAO REPORT- Not later than 90 days after the date of the enactm ent of this Act, the Comptroller General of the United States shall submit a rep ort to the Committee on Ways and Means of the House of Representatives and the C ommittee on Finance of the Senate describing the level of telephone access by th e public to the local offices of the Social Security Administration.

(e) EFFECTIVE DATE- Subsections (a) and (b) shall take effect on Ap ril 1, 1991.

SEC. 6058. AMENDMENTS RELATING TO SOCIAL SECURITY ACCOUNT STATEMENTS.

(a) IN GENERAL- Section 1142 of the Social Security Act (42 U.S.C. 1320b-13), as added by section 10308 of the Omnibus Budget Reconciliation Act of 1989 (103 Stat. 2485), is amended--

(1) by striking `sec. 1142.' and inserting `sec. 1143.'; and

(2) in subsection (c)(2), by striking ` a biennial' and inserti ng `an annual'.

(b) DISCLOSURE OF ADDRESS INFORMATION BY INTERNAL REVENUE SERVICE T O SOCIAL SECURITY ADMINISTRATION-

(1) IN GENERAL- Section 6103(m) of the Internal Revenue Code of 1986 (relating to disclosure of taxpayer identity information) is amended by ad ding at the end the following new paragraph:

`(7) SOCIAL SECURITY ACCOUNT STATEMENT FURNISHED BY SOCIAL SECURITY ADMINISTRATION- Upon written request by the Commissioner of Social Security, th e Secretary may disclose the mailing address of any taxpayer who is entitled to receive a social security account statement pursuant to section 1143(c) of the S ocial Security Act, for use only by officers, employees or agents of the Social Security Administration for purposes of mailing such statement to such taxpayer. '.

(2) SAFEGUARDS- Section 6103(p)(4) of such Code (relating to sa feguards) is amended, in the matter following subparagraph (f)(iii), by striking `subsection (m)(2), (4), or (6)' and inserting `paragraph (2), (4), (6), or (7) of subsection (m)'.

(3) UNAUTHORIZED DISCLOSURE PENALTIES- Paragraph (2) of section 7213(a) of such Code (relating to unauthorized disclosure of returns and return information) is amended by striking `(m)(2), (4), or (6)' and inserting `(m)(2) , (4), (6), or (7)'.

SEC. 6059. TRIAL WORK PERIOD DURING ROLLING FIVE-YEAR PERIOD FOR ALL DISABLED BENEFICIARIES.

(a) IN GENERAL- Section 222(c)(42 U.S.C. 422(c)) is amended--< /ul>
(1) in paragraph (4)(A), by striking `, beginning on or after t he first day of such period,' and inserting `in any period of 60 consecutive mon ths,'; and

(2) by striking paragraph (5).

(b) EFFECTIVE DATE- The amendments made by subsection (a) shall tak e effect on January 1, 1992.

SEC. 6060. CONTINUATION OF BENEFITS ON ACCOUNT OF PARTICIPATION IN A NON-STATE VOCATIONAL REHABILITATION PROGRAM.

(a) IN GENERAL- Section 225(b) (42 U.S.C. 425(b)) is amended--

(1) by striking paragraph (1) and inserting the following new p aragraph:

`(1) such individual is participating in an approved program of vocational rehabilitation services, and'; and

(2) in paragraph (2), by striking `Commissioner of Social Secur ity' and inserting `Secretary'.

(b) PAYMENTS AND PROCEDURES- Section 1631(a)(6) (42 U.S.C. 1383(a)( 6)) is amended--

(1) by striking subparagraph (A) and inserting the following ne w subparagraph:

`(A) such individual is participating in an approved program of vocational rehabilitation services, and'; and

(2) in subparagraph (B), by striking `Commissioner of Social Se curity' and inserting `Secretary'.

(c) EFFECTIVE DATE- The amendments made by this section shall be ef fective with respect to benefits payable for months after the eleventh month fol lowing the month in which this Act is enacted and shall apply only with respect to individuals whose blindness or disability has or may have ceased after such e leventh month, as determined by the Secretary of Health and Human Services.

SEC. 6061. LIMITATION ON NEW ENTITLEMENT TO SPECIAL AGE-72 PAYMENTS.

(a) IN GENERAL- Section 228(a)(2) (42 U.S.C. 428(a)(2)) is amended by striking `(B)' and inserting `(B)(i) attained such age after 1967 and before 1972, and (ii)'.

(b) EFFECTIVE DATE-- The amendment made by subsection (a) shall app ly with respect benefits payable on the basis of applications filed after the da te of the enactment of this Act.

SEC. 6062. ELIMINATION OF ADVANCED CREDITING TO THE TRUST FUNDS OF SO CIAL SECURITY PAYROLL TAXES AND REVENUES FROM TAXATION OF SOCIAL SECURITY BENEFI TS.

(a) IN GENERAL- Section 201(a)(42 U.S.C. 401(a)) is amended--< /ul>
(1) in the first sentence following clause (4)--

(A) by striking `monthly on the first day of each calendar month' both places it appears and inserting `from time to time';
< /ul>
(B) by striking `to be paid to or deposited into the Treasu ry during such month' and inserting `paid to or deposited into the Treasury'; an d

(2) in the last sentence, by striking `Fund;' and inserting `Fu nd. Notwithstanding the preceding sentence, in any month for which the Secretary of the Treasury determines that the assets of either such Trust Fund would othe rwise be inadequate to meet such Fund's obligations, the Secretary of the Treasu ry shall transfer to such Trust Fund on the first day of such month the amount w hich would have been transferred to such Fund under this section as in effect on October 1, 1990; and'.

(c) EFFECTIVE DATE- The amendments made by this section shall becom e effective on the first day of the month following the month in which this Act is enacted.

SEC. 6063. ELIMINATION OF ELIGIBILITY FOR RETROACTIVE BENEFITS FOR CE RTAIN INDIVIDUALS ELIGIBLE FOR REDUCED BENEFITS.

(a) IN GENERAL- Section 202(j)(4) (42 U.S.C. 402(j)(4)) is amended- -

(1) in subparagraph (A), by striking `if the effect' and all th at follows and inserting `if the amount of the monthly benefit to which such ind ividual would otherwise be entitled for any such month would be subject to reduc tion pursuant to subsection (q).'; and

(2) in subparagraph (B), by striking clauses (i) and (iv) and b y redesignating clauses (ii), (iii), and (v) as clauses (i), (ii), and (iii), re spectively.

(b) EFFECTIVE DATE- The amendments made by this section shall apply with respect to applications for benefits filed on or after January 1, 1991.

SEC. 6064. CONSOLIDATION OF OLD METHODS OF COMPUTING PRIMARY INSURANC E AMOUNTS.

(a) CONSOLIDATION OF COMPUTATION METHODS-

(1) IN GENERAL- Section 215(a)(5) (42 U.S.C. 415(a)(5)) is amen ded--

(A) by striking `For purposes of' and inserting `(A) Subjec t to subparagraphs (B), (C), (D) and (E), for purposes of';

(B) by striking the last sentence; and

(C) by adding at the end the following new subparagraphs:

`(B)(i) Subject to clauses (ii), (iii), and (iv), and notwithstandi ng any other provision of law, the primary insurance amount of any individual de scribed in subparagraph (C) shall be, in lieu of the primary insurance amount as computed pursuant to any of the provisions referred to in subparagraph (D), the primary insurance amount computed under subsection (a) of section 215 as in eff ect in December 1978, without regard to subsection (b)(4) and (c) of such sectio n as so in effect.

`(ii) The computation of a primary insurance amount under this subp aragraph shall be subject to section 104(j)(2) of the Social Security Amendments of 1972 (relating to the number of elapsed years under section 215(b)).
`(iii) In computing a primary insurance amount under this subparagr aph, the dollar amount specified in paragraph (3) of section 215(a) (as in effec t in December 1978) shall be increased to $11.50.

`(iv) In the case of an individual to whom section 215(d) applies, the primary insurance amount of such individual shall be the greater of--
`(I) the primary insurance amount computed under the preceding clauses of this subparagraph, or `(II) the primary insurance amount computed un der section 215(d).

`(C) An individual is described in this subparagraph if--

`(i) paragraph (1) does not apply to such individual by reason of such individual's eligibility for an old-age or disability insurance benefit, or the individual's death, prior to 1979, and

`(ii) such individual's primary insurance amount computed under this section as in effect immediately before the date of the enactment of the O mnibus Budget Reconciliation Act of 1990 would have been computed under the prov isions described in subparagraph (D).

`(D) The provisions described in this subparagraph are--

`(i) the provisions of this subsection as in effect prior to th e enactment of the Social Security Amendments of 1965, if such provisions would preclude the use of wages prior to 1951 in the computation of the primary insura nce amount,

`(ii) the provisions of section 209 as in effect prior to the e nactment of the Social Security Act Amendments of 1950, and

`(iii) the provisions of section 215(d) as in effect prior to t he enactment of the Social Security Amendments of 1977.

`(E) For purposes of this paragraph, the table for determining prim ary insurance amounts and maximum family benefits contained in this section in D ecember 1978 shall be revised as provided by subsection (i) for each year after 1978.'.

(2) COMPUTATION OF PRIMARY INSURANCE BENEFIT UNDER 1939 ACT-

(A) DIVISION OF WAGES BY ELAPSED YEARS- Section 215(d)(1) ( 42 U.S.C. 415(d)(1)) is amended--

(i) in subparagraph (A), by inserting `and subject to s ection 104(j)(2) of the Social Security Amendments of 1972' after `thereof'; and

(ii) by striking `(B) For purposes' in subparagraph (B) and all that follows through clause (ii) of such subparagraph and inserting the following:

`(B) For purposes of subparagraphs (B) and (C) of subsection (b )(2) (as so in effect)--

`(i) the total wages prior to 1951 (as defined in subparagr aph (C) of this paragraph) of an individual--

`(I) shall, in the case of an individual who attained a ge 21 prior to 1950, be divided by the number of years (hereinafter in this subp aragraph referred to as the `divisor') elapsing after the year in which the indi vidual attained age 20, or 1936 if later, and prior to the earlier of the year o f death or 1951, except that such divisor shall not include any calendar year en tirely included in a period of disability, and in no case shall the divisor be l ess than one, and

`(II) shall, in the case of an individual who died befo re 1950 and before attaining age 21, be divided by the number of years (hereinaf ter in this subparagraph referred to as the `divisor') elapsing after the second year prior to the year of death, or 1936 if later, and prior to the year of dea th, and in no case shall the divisor be less than one; and

`(ii) the total wages prior to 1951 (as defined in subparag raph (C) of this paragraph) of an individual who either attained age 21 after 19 49 or died after 1949 before attaining age 21, shall be divided by the number of years (hereinafter in this subparagraph referred to as the `divisor') elapsing after 1949 and prior to 1951.'.

(B) CREDITING OF WAGES TO YEARS- Clause (iii) of section 21 5(d)(1)(B) (42 U.S.C. 415(d)(1)(B)(iii)) is amended to read as follows:

`(iii) if the quotient exceeds $3,000, only $3,000 shall be deemed to be the individual's wages for each of the years which were used in co mputing the amount of the divisor, and the remainder of the individual's total w ages prior to 1951 (I) if less than $3,000, shall be deemed credited to the comp utation base year (as defined in subsection (b)(2) as in effect in December 1977 ) immediately preceding the earliest year used in computing the amount of the di visor, or (II) if $3,000 or more, shall be deemed credited, in $3,000 increments , to the computation base year (as so defined) immediately preceding the earlies t year used in computing the amount of the divisor and to each of the computatio n base years (as so defined) consecutively preceding that year, with any remaind er less than $3,000 being credited to the computation base year (as so defined) immediately preceding the earliest year to which a full $3,000 increment was cre dited; and'.

(C) APPLICABILITY- Section 215(d) is further amended--

(i) in paragraph (2)(B), by striking `except as provide d in paragraph (3),';

(ii) by striking paragraph (2)(C) and inserting the fol lowing:

`(C)(i) who becomes entitled to benefits under section 202(a) o r 223 or who dies, or

`(ii) whose primary insurance amount is required to be recomput ed under paragraph (2), (6), or (7) of subsection (f) or under section 231.'; an d

(iii) by striking paragraphs (3) and (4).

(3) CONFORMING AMENDMENTS-

(A) Section 215(i)(4) (42 U.S.C. 415(i)(4)) is amended in t he first sentence by inserting `and as amended by section 6064 of the Omnibus Bu dget Reconciliation Act of 1990' after `as then in effect'.

(B) Section 203(a)(8) (42 U.S.C. 403(a)(8)) is amended in t he first sentence by inserting `and as amended by section 6064 of the Omnibus Bu dget Reconciliation Act of 1990,' after `December 1978' the second place it appe ars.

(C) Section 215(c) (42 U.S.C. 415(c)) is amended by strikin g `This' and inserting `Subject to the amendments made by section 6064 of the Om nibus Budget Reconciliation Act of 1990, this'.

(D) Section 215(f)(7) (42 U.S.C. 415(f)(7)) is amended by s triking the period at the end of the first sentence and inserting `, including a primary insurance amount computed under any such subsection whose operation is modified as a result of the amendments made by section 6064 of the Omnibus Budge t Reconciliation Act of 1990'.

(E)(i) Section 215(d) (42 U.S.C. 415(d)) is further amended by redesignating paragraph (5) as paragraph (3).

(ii) Subsections (a)(7)(A), (a)(7)(C)(ii), and (f)(9)(A) of section 215 of such Act (42 U.S.C. 415) are each amended by striking `subsectio n (d)(5)' each place it appears and inserting `subsection (d)(3)'.

`(iii) Section 215(f)(9)(B) (42 U.S.C. 415(f)(9)(B)) is ame nded by striking `subsection (a)(7) or (d)(5)' each place it appears and inserti ng `subsection (a)(7) or (d)(3)'.

(4) EFFECTIVE DATE-

(A) IN GENERAL- Except as provided in subparagraph (B), the amendments made by this subsection shall apply with respect to the computation of the primary insurance amount of any insured individual in any case in which a person becomes entitled to benefits under section 202 or 223 on the basis of su ch insured individual's wages and self-employment income for months after the 18 -month period following the month in which this Act is enacted, except that such amendments shall not apply if any person is entitled to benefits based on the w ages and self-employment income of such insured individual for the month precedi ng the initial month of such person's entitlement to such benefits under section 202 or 223.

(B) RECOMPUTATIONS- The amendments made by this subsection shall apply with respect to any primary insurance amount upon the recomputation of such primary insurance amount if such recomputation is first effective for mo nthly benefits for months after the 18-month period following the month in which this Act is enacted.

(b) BENEFITS IN CASE OF VETERANS- Section 217(b) (42 U.S.C. 417(b)) is amended--

(1) in the first sentence of paragraph (1), by striking `Any' a nd inserting `Subject to paragraph (3), any'; and

(2) by adding at the end the following new paragraph:

`(3)(A) The preceding provisions of this subsection shall apply for purposes of determining the entitlement to benefits under section 202, based on the primary insurance amount of the deceased World War II veteran, of any survi ving individual only if such surviving individual makes application for such ben efits before the end of the 18-month period after the month in which the Omnibus Budget Reconciliation Act of 1990 was enacted.

`(B) Subparagraph (A) shall not apply if any person is entitled to benefits under section 202 based on the primary insurance amount of such veteran for the month preceding the month in which such application is made.'.

(c) APPLICABILITY OF ALTERNATIVE METHOD FOR DETERMINING QUARTERS OF COVERAGE WITH RESPECT TO WAGES IN THE PERIOD FROM 1937 TO 1950-

(1) APPLICABILITY WITHOUT REGARD TO NUMBER OF ELAPSED YEARS- Se ction 213(c) (42 U.S.C. 413(c)) is amended--

(A) by inserting `and 215(d)' after `214(a)'; and

(B) by striking `except where--' and all that follows and i nserting the following: `except where such individual is not a fully insured ind ividual on the basis of the number of quarters of coverage so derived plus the n umber of quarters of coverage derived from the wages and self-employment income credited to such individual for periods after 1950.'.

(2) APPLICABILITY WITHOUT REGARD TO DATE OF DEATH- Section 155( b)(2) of the Social Security Amendments of 1967 is amended by striking `after su ch date'.

(3) EFFECTIVE DATE- The amendments made by this subsection shal l apply only with respect to individuals who--

(A) make application for benefits under section 202 of the Social Security Act after the 18-month period following the month in which this Act is enacted, and

(B) are not entitled to benefits under section 227 or 228 o f such Act for the month in which such application is made.

SEC. 6065. SUSPENSION OF DEPENDENT'S BENEFITS WHEN THE WORKER IS IN A N EXTENDED PERIOD OF ELIGIBILITY.

(a) IN GENERAL- Section 223(e) (42 U.S.C. 623(e)) is amended by--

(1) by inserting `(1)' after `(e)'; and

(2) by adding at the end the following new paragraph:

`(2) No benefit shall be payable under section 202 on the basis of the wages and self-employment income of an individual entitled to a benefit unde r subsection (a)(1) of this section for any month for which the benefit of such individual under subsection (a)(1) is not payable under paragraph (1).'.
(b) EFFECTIVE DATE- The amendments made by subsection (a) shall app ly with respect to benefits for months after the date of the enactment of this A ct.

Subtitle B--Medicare

PART 1--PROVISIONS RELATING ONLY TO PART A

SEC. 6101. REDUCTIONS IN PAYMENTS FOR CAPITAL-RELATED COSTS OF INPATI ENT HOSPITAL SERVICES.

(a) IN GENERAL- Section 1886(g)(3)(A)(v) (42 U.S.C. 1395ww(g)(3)(A) (v)) is amended by striking `September 30, 1990' and inserting `September 30, 19 91, and by 10 percent for payments attributable to portions of cost reporting pe riods or discharges (as the case may be) occurring during the period beginning O ctober 1, 1991 and ending September 30, 1995.'

(b) EXEMPTION FOR RURAL PRIMARY CARE HOSPITALS- Section 1886(g)(3)( B) (42 U.S.C. 1395ww(g)(3)(B)) is amended by striking `1886(d)(5)(D)(iii)).' and inserting `1886(d)(5)(D)(iii) or a rural primary care hospital (as defined in s ubsection (mm)(1)).'

(c) PROSPECTIVE PAYMENT FOR CAPITAL- Section 1886(g)(1) (42 U.S.C. 1395ww(g)(1)) is amended--

(1) by inserting at the end of subparagraph (A) the following: `Payment under such system shall be determined in a manner that assures that the expected aggregate payments for such capital-related costs for discharges occur ring during fiscal year 1992 are not greater or less than those that would have been made for portions of cost reporting periods occurring during fiscal year 19 92, taking into account the reductions specified in paragraph (3)(A)(v).'; and

(2) by inserting after subparagraph (B)(iv) the following sente nce: `Notwithstanding clause (i), such system may provide for continuation of pa yment for fixed capital on a reasonable cost basis, subject to reductions in par agraph (3)(A)(v).'.

SEC. 6102. PROSPECTIVE PAYMENT HOSPITALS.

(a) CHANGES IN HOSPITAL UPDATE FACTORS-

(1) IN GENERAL- Section 1886(b)(3)(B)(i) (42 U.S.C. 1395ww(b)(3 )(B)(i)) is amended--

(A) by striking `and' at the end of subclause (V);

(B) in subclause (VI)--

(i) by striking `1991' and inserting `1994', and

(ii) by redesignating such subclause as subclause (IX); and

(C) by inserting after subclause (V) the following new subc lauses:

`(VI) for fiscal year 1991, the market basket percentage increa se minus 2.0 percentage points for hospitals in all areas,

`(VII) for fiscal year 1992, the market basket percentage incre ase minus 1.5 percentage points for hospitals in all areas,

`(VIII) for fiscal year 1993, the market basket percentage incr ease minus 1.4 percentage points for hospitals in all areas, and'.

(2) EFFECTIVE DATE- The amendments made by paragraph (1) shall apply to payments for discharges occurring on or after January 1, 1991.

(b) PHASE-OUT OF SEPARATE AVERAGE STANDARDIZED AMOUNTS-

(1) IN GENERAL- Section 1886(b)(3)(B)(i) (42 U.S.C. 1395ww(b)(3 )(B)(i)), as amended by subsection (a)(1), is further amended--

(A) in subclause (VI), by striking `in all areas,' and inse rting `in a large urban or other urban area, and the market basket percentage in crease for hospitals located in a rural area,';

(B) in subclause (VII), by striking `in all areas,' and ins erting `in a large urban or other urban area, and the market basket percentage i ncrease for hospitals located in a rural area,';

(C) in subclause (VIII), by striking `in all areas, and' an d inserting `in a large urban or other urban area, and the market basket percent age increase for hospitals located in a rural area,';

(D) in subclause (IX)--

(i) by striking `1994' and inserting `1995', and

(ii) by redesignating such subclause as subclause (X); and

(E) by inserting after subclause (VIII) the following new s ubclause:

`(IX) for fiscal year 1994, the market basket percentage increa se for hospitals located in a large urban or other urban area, and such percenta ge increase for hospitals located in a rural area as will provide for a reductio n of 1/2 (compared to fiscal year 1993) in the percentage difference between t he average standardized amount determined under subsection (d)(3)(A) for hospita ls located in an urban area (other than a large urban area) and such average sta ndardized amount for hospitals located in a rural area,'.

(2) CONFORMING AMENDMENTS- Section 1886(d) (42 U.S.C. 1395ww(d) ) is amended in paragraph (3)(A)--

(A) in clause (ii), by striking `the Secretary' and inserti ng `and ending on or before September 30, 1994, the Secretary',

(B) by redesignating clause (iii) as clause (iv), and< /ul>

(C) by inserting after clause (ii) the following new clause :

`(iii)(I) For discharges occurring in the fiscal year b eginning on October 1, 1994, the average standardized amount for hospitals locat ed in a rural area shall equal the average standardized amount for hospitals loc ated in an other urban area.

`(II) For discharges occurring in a fiscal year beginni ng on or after October 1, 1995, the Secretary shall compute an average standardi zed amount for hospitals located in a large urban area and for hospitals located in other areas within the United States and within each region equal to the res pective average standardized amount computed for the previous fiscal year under this subparagraph increased by the applicable percentage increase under subsecti on (b)(3)(B)(i) with respect to hospitals located in the respective areas for th e fiscal year involved.';

(D) in paragraph (3)(B), by striking `for hospitals located in an urban area and for hospitals located in a rural area' and by striking `fo r hospitals located in such respective area';

(E) in paragraph (3)(D)(i)--

(i) in the matter preceding subclause (I), by striking `an urban area (or,' and all that follows through `area),' and inserting `a larg e urban area, and

(ii) in subclause (I), by striking `an urban area' and inserting `a large urban area'; and

(F) in paragraph (3)(D)(ii), by striking `a rural area' eac h place it appears and inserting `other areas'.

(3) EFFECTIVE DATE- The amendments made by paragraph (1) shall apply to payments for discharges occurring on or after January 1, 1991, and the amendments made by paragraph (2) shall apply to payments for discharges occurrin g on or after October 1, 1994.

(c) PHASE-IN OF AREA WAGE INDEX UPDATE FOR FISCAL YEAR 1991- < /ul>
(1) AREA WAGE INDEX- Subject to the last sentence of section 18 86(d)(3)(E) of the Social Security Act, for purposes of determining the amount o f payment made to a hospital under part A of title XVIII of the Social Security Act for the operating costs of inpatient hospital services, the Secretary of Hea lth and Human Services, in adjusting such amount under such section to reflect t he relative hospital wage level in the geographic area of the hospital compared to the national average hospital wage index, shall--

(A) for discharges occurring during fiscal year 1991, apply a combined area wage index consisting of--

(i) 75 percent of the area wage index determined using the survey of the 1988 wages and wage-related costs of hospitals in the United S tates conducted under such section, and

(ii) 25 percent of the area wage index applicable to th e hospital for discharges occurring during fiscal year 1990, as determined using the survey of the 1984 wages and wage-related costs of hospitals in the United States conducted under such section; and

(B) for discharges occurring during fiscal year 1992 and fi scal year 1993, apply the area wage index otherwise applicable to the hospital u nder such section for discharges occurring during such fiscal year.

(2) STUDY OF HOSPITAL OCCUPATIONAL MIX AND WAGE INDEX COMPUTATI ON- The Prospective Payment Assessment Commission (hereinafter referred to as th e `Commission') shall examine State level and other available data measuring ear nings and paid hours of employment by occupational category of workers employed by hospitals. The examination shall include analysis of the impact of variation in occupational mix on the computation of the area wage index (as computed under section 1886 (d)) of the Social Security Act. Based on the findings of this ana lysis, the Commission shall include in its March 1991 report recommendations reg arding the feasibility and desirability of modifying the wage index computation to take into account occupational mix. In considering alternative computations o r adjustments to the wage index, the Commission shall examine and take into acco unt variation in occupational mix resulting from differences in State codes and requirements.

SEC. 6103. REDUCTION IN INDIRECT MEDICAL EDUCATION PAYMENTS.

(a) INDIRECT MEDICAL EDUCATION PAYMENTS REDUCED-

(1) Section 1886(d)(5)(B)(ii) (42 U.S.C. 1395ww(d)(5)(B)(ii)) i s amended--

(A) in subclause (I), by striking `1.89' and inserting in l ieu thereof `1.68'; and

(B) in subclause (II), by striking `1.43' and inserting in lieu thereof `1.28'.

(2) Section 1886(d)(3)(C)(ii) (42 U.S.C. 1395ww(d)(3)(C)(ii)) i s amended--

(A) in subclause (I)--

(i) by striking `1985 and' and inserting in lieu thereo f `1985,', and

(ii) by inserting `and by section 6103 of the Omnibus B udget Reconciliation Act of 1990' after `1987'; and

(B) in subclause (II)--

(i) by striking `1985 and' and inserting in lieu thereo f `1985,', and

(ii) by inserting `and by section 6103 of the Omnibus B udget Reconciliation Act of 1990' after `1987'.

(b) EFFECTIVE DATE- The amendments made by this section shall apply to payments for discharges occurring on or after January 1, 1991.

SEC. 6104. PPS EXEMPT HOSPITALS.

(a) DEADLINES FOR REVIEW AND DECISION- (1) Section 1816(f) (42 U.S. C. 1395h(f)) is amended--

(A) by striking `(1)' and `(2)' and inserting `(A)' and `(B)';

(B) by striking `(f)' and inserting `(f)(1)'; and

(C) by striking `Such standards and criteria' and all that foll ows and inserting the following:

`(2) The standards and criteria established under paragraph (1) sha ll include--

`(A) with respect to claims for services furnished under this p art by any provider of services other than a hospital--

`(i) whether such agency or organization is able to process 75 percent of reconsiderations within 60 days (except in the case of fiscal yea r 1989, 66 percent of reconsiderations) and 90 percent of reconsiderations withi n 90 days, and

`(ii) the extent to which such agency or organization's det erminations are reversed on appeal; and

`(B) with respect to applications for a reconsideration of the target amount applicable under section 1886(b) to a hospital that is not a subse ction (d) hospital (as defined in section 1886(d)(1)(B))--

`(i) if such agency or organization receives a completed ap plication, whether such agency or organization is able to process such applicati on not later than 60 days after the application is filed, and

`(ii) if such agency or organization receives an incomplete application, whether such agency or organization is able to return the applicat ion with instructions on how to complete the application not later than 60 days after the application is filed.'.

(2) Section 1886(b)(4)(A) (42 U.S.C. 1395ww(b)(4)(A)) is amended by adding at the end the following new sentence: `The Secretary shall announce a d ecision on any request for an exemption, exception, or adjustment under this par agraph not later than 180 days after receiving a completed application for such exemption, exception, or adjustment, and shall include in such decision a detail ed explanation of the grounds on which such request was approved or denied.'.

(b) STANDARDS FOR ASSIGNMENT OF NEW BASE PERIOD- Section 1886(b)(4) (42 U.S.C. 1395ww(b)(4)) is amended--

(1) by redesignating subparagraph (B) as subparagraph (C); and

(2) by inserting after subparagraph (A) the following new subpa ragraph:

`(B) In determining under subparagraph (A) whether to assign a new base period which is more representative of the reasonable and necessary cost to a hospital of providing inpatient services, the Secretary shall take into consi deration--

`(i) changes in applicable technologies, medical practices, or case mix severity that increase the hospital's costs;

`(ii) whether increases in wages and wage-related costs in the geographic area in which the hospital is located substantially exceed the averag e of the increases in such costs paid by hospitals in the United States; and

`(iii) such other factors as the Secretary considers appropriat e in determining increases in the hospital's costs of providing inpatient servic es.'.

(c) GUIDANCE TO INTERMEDIARIES AND HOSPITALS- The Administrator of the Health Care Financing Administration shall provide guidance to agencies and organizations performing functions pursuant to section 1816 of the Social Securi ty Act and to hospitals that are not subsection (d) hospitals (as defined in sec tion 1886(d)(1)(B) of such Act) to assist such agencies, organizations, and hosp itals in filing complete applications with the Administrator for exemptions, exc eptions, and adjustments under section 1886(b)(4)(A) of such Act.

(d) EFFECTIVE DATES- The amendments made by subsection (a) shall ta ke effect on the effective date of the next regular publication of such standard s, and the amendments made by subsections (b) and (c) shall take effect upon ena ctment of this Act.

SEC. 6105. EXPANSION OF HOSPICE BENEFIT.

(a) IN GENERAL- Section 1812 (42 U.S.C. 1395d) is amended--
(1) in subsection (a)(4), by striking `90 days each' and all th at follows through `with respect to' and inserting the following: `90 days each, a subsequent period of 30 days, and a subsequent extension period with respect to'; and

(2) in subsection (d)--

(A) in paragraph (1), by striking `90 days each' and all th at follows through `lifetime' and inserting the following: `90 days each, a subs equent period of 30 days, and a subsequent extension period during the individua l's lifetime', and

(B) in paragraph (2)(B), by striking `a 90- or 30-day perio d,' and inserting `a 90- or 30-day period or a subsequent extension period,'.

(b) CONFORMING AMENDMENT- Section 1814(a)(7)(A) (42 U.S.C. 1395f(a) (7)(A)) is amended--

(1) in clause (i), by striking `and' at the end;

(2) in clause (ii), by striking the semicolon at the end and in serting `, and'; and

(3) by adding at the end the following new clause:

`(iii) in a subsequent extension period, the medical di rector or physician described in clause (i)(II) recertifies at the beginning of the period that the individual is terminally ill;'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply with respect to care and services furnished on or after January 1, 1990.
SEC. 6106. MISCELLANEOUS AND TECHNICAL AMENDMENTS RELATING TO PART A.

(a) EXTENSIONS OF WAIVERS OF LIABILITY FOR SKILLED NURSING FACILITI ES AND HOSPICES-

(1) SKILLED NURSING FACILITIES- The second sentence of section 9126(c) of the Consolidated Omnibus Budget Reconciliation Act of 1985 is amended by striking `October 31, 1990' and inserting `December 31, 1995'.

(2) HOSPICES- Section 9305(f)(2) of the Omnibus Budget Reconcil iation Act of 1986 is amended by striking `November 1, 1990' and inserting `Dece mber 31, 1995'.

(3) EFFECTIVE DATE- The amendments made by paragraphs (1) and ( 2) shall take effect on the date of the enactment of this Act.

(b) DESIGNATIONS OF CERTAIN HOSPITALS AS RURAL PRIMARY CARE HOSPITA LS-

(1) PRIORITY IN DISCRETIONARY DESIGNATIONS GIVEN TO HOSPITALS A FFILIATED WITH A RURAL HEALTH NETWORK IN A PARTICIPATING STATE- Section 1820(i)( 2)(C) (42 U.S.C. 1395i-4(i)(2)(C)) is amended by adding at the end the following new sentence: `In designating facilities as rural primary care hospitals under this subparagraph, the Secretary shall give preference to facilities that have e ntered into an agreement described in subsection (g)(2) with a rural health netw ork located in a State receiving a grant under subsection (a)(1).'.

(2) ELIGIBILITY OF CERTAIN CLOSED HOSPITALS- Section 1820(f)(1) (B) (42 U.S.C. 1395i-4(f)(1)(B)) is amended by striking `hospital,' and insertin g the following: `hospital (or, in the case of a facility that closed during the 12-month period that ends on the date the facility applies for such designation , at the time the facility closed),'.

(3) ELIGIBILITY OF OTHER FACILITIES AS RURAL PRIMARY CARE HOSPI TALS- Section 1820(f)(1)(F) (42 U.S.C. 1395i-4(f)(1)(F)) is amended by inserting before the period at the end `, or meets such substitute criteria limiting the number of inpatient beds and the hours of inpatient care as the State may impose with the approval of the Secretary'.

(4) EFFECTIVE DATE- The amendments made by paragraphs (1), (2), and (3) shall take effect on the date of the enactment of this Act.

(c) RESPONSIBILITIES AND REPORTING REQUIREMENTS OF PROSPECTIVE PAYM ENT ASSESSMENT COMMISSION- Section 1886 (42 U.S.C. 1395ww) is amended--

(1) in subsection (d)(4)(D), by striking the last sentence;

(2) in subsection (e)(2)--

(A) by striking `recommendations to the Secretary' and inse rting `recommendations to the Secretary and Congress';

(B) by inserting `(A)' after `(2)' and by adding at the end the following new subparagraphs:

`(B) In order to promote the efficient and effective delive ry of high-quality health care services, the Commission shall, in addition to ca rrying out its functions under subsection (d)(4)(D) and subparagraph (A), study and make recommendations for each fiscal year to the Secretary and the Congress regarding changes in each existing reimbursement policy under this title under w hich payments to an institution are based upon prospectively determined rates an d the development of new institutional reimbursement policies under this title, including recommendations relating to--

`(i) payments during such fiscal year under the prospec tive payment system established under this section for determining payments for the operating costs of inpatient hospital services, including changes in the num ber of diagnosis-related groups used to classify inpatient hospital discharges u nder subsection (d), adjustments to such groups to reflect severity of illness, and changes in the methods by which hospitals are reimbursed for capital-related costs; and

`(ii) additional payments made to hospitals under subse ction (d), including payments made--

`(I) to hospitals located in large urban areas;

`(II) to hospitals located in rural areas, includin g regional referral centers and sole community hospitals;

`(III) for the indirect costs of medical education;

`(IV) for hospitals serving a disproportionate shar e of low-income patients; and

`(V) for discharges described in subsection (d)(5)( A).

`(C) The Commission, by not later than June 1 of each year (beginning with calendar year 1991), shall submit a report to the Congress exami ning the American health care system including issues related to--

`(i) trends in health care costs;

`(ii) the financial condition of hospitals including th e level of payments made to hospitals under this title;

`(iii) trends in utilization of health care services; a nd

`(iv) new and innovative methods utilized by private em ployers and insurers to constrain growth in health care related costs.

`(D) The Commission shall include in its annual recommendat ions under subparagraph (B) recommendations on major revisions to the hospital p ayment system including revisions of the prospective payment system or other mod ifications to payment methods under this title for hospital outpatient services, and recommendations with regard to payments to hospitals exempt from the prospe ctive payment system, to skilled nursing facilities, and for home health service s.';

(3) in subsection (e)(3)(A) by striking the period at the end a nd inserting the following: `, together with any other recommendations under par agraph (2)(B) that are applicable to institutional reimbursements under this tit le in that fiscal year.';

(4) in subsection (e)(4)--

(A) by striking `(4)' and inserting `(4)(A)', and

(B) by adding at the end the following new subparagraph:

`(B) In addition to the recommendation made under subparagr aph (A), the Secretary shall, taking into consideration the recommendations of t he Commission under paragraph (2)(B), recommend for each fiscal year (beginning with fiscal year 1992) other appropriate changes in each existing reimbursement policy under this title under which payments to an institution are based upon pr ospectively determined rates.';

(5) in subsection (e)(5)--

(A) by striking `recommendation' each place it appears and inserting `recommendations', and

(B) by adding at the end the following new sentence: `To th e extent that the Secretary's recommendations under paragraph (4) differ from th e Commission's recommendations for that fiscal year, the Secretary shall include in the publication referred to in subparagraph (A) an explanation of the Secret ary's grounds for not following the Commission's recommendations.'; and

(6) in subsection (e)(6)(G) by striking clause (i) and by redes ignating clauses (ii) and (iii) as clauses (i) and (ii), respectively.

(d) PROPAC STUDY OF MEDICAID PAYMENTS TO HOSPITALS- The Prospective Payment Assessment Commission (hereafter in this subsection referred to as the `Commission') shall conduct a study of hospital payment rates under State medica id programs established under title XIX of the Social Security Act. The Commissi on shall specifically examine in such study the level of hospital reimbursement under title XIX programs, the relationship between these payments and payments m ade to hospitals under title XVIII of the Social Security Act, and the financial condition of affected hospitals, with particular attention to hospitals in urba n areas which treat large numbers of title XIX recipients and other low-income i ndividuals. By no later than October 1, 1991, the Commission shall submit a repo rt to Congress on such study and shall include such recommendations as the Commi ssion deems appropriate.

(e) UPDATE OF ROUTINE SERVICE COSTS OF SKILLED NURSING FACILITIES-

(1) IN GENERAL- Section 6024 of the Omnibus Budget Reconciliati on Act of 1989 is amended by adding at the end the following new sentence: `The Secretary shall update such costs under such section for cost reporting periods beginning on or after October 1, 1989, by using cost reports submitted by skille d nursing facilities for cost reporting periods ending not earlier than January 31, 1988, and not later than December 31, 1988.'.

(2) 2-YEAR UPDATES REQUIRED- Section 1888(a) (42 U.S.C. 1395yy( a)) is amended by inserting before the period at the end of the matter following such subsection the following: `, and shall, for cost reporting periods beginni ng on or after October 1, 1992 and every 2 years thereafter, provide for an upda te to the per diem cost limits described in this subsection'.

(3) EFFECTIVE DATE- The amendments made by paragraphs (1) and ( 2) shall take effect as if included in the enactment of the Omnibus Budget Recon ciliation Act of 1989.

(f) CLARIFICATION OF SECRETARIAL WAIVER AUTHORITY-

(1) IN GENERAL- Section 6003 of the Omnibus Budget Reconciliati on Act of 1989 is amended by adding at the end the following:

`(k) CLARIFICATION OF WAIVER AUTHORITY- The Secretary of Health and Human Services (in this subsection referred to as the `Secretary') is authorize d to waive such provisions of title XVIII of the Social Security Act as are nece ssary to conduct any demonstration project for limited-service rural hospitals w ith respect to which the Secretary has entered into an agreement before the date of the enactment of this Act.'.

(2) NURSING HOME DEMONSTRATIONS- Section 6901(d)(3)(B) of the O mnibus Budget Reconciliation Act of 1989 is amended to read as follows:

`(B) The Secretary may also waive the survey and certification requ irements described in subparagraph (A) to the extent the Secretary determines is necessary to carry out a pilot demonstration project in Wisconsin and demonstra tion projects in other States (relating to testing an approved alternative surve y and certification process) as part of a nursing home prospective case-mix paym ent demonstration project.'.

(3) EFFECTIVE DATE- The amendment made by paragraphs (1) and (2 ) shall be effective as if included in the enactment of the Omnibus Budget Recon ciliation Act of 1989.

(g) GEOGRAPHIC CLASSIFICATION REVIEW BOARD- (1) For purposes of sec tion 1886(d)(10)(C)(ii) (42 U.S.C. 1395ww(d)(10)(C)(ii)), an application of a su bsection (d) hospital submitted to the Secretary under such clause shall be cons idered to have been submitted by the first day of the preceding fiscal year und er such clause if it is submitted within 60 days of the date of publication of t he guidelines described in subparagraph (D)(i) of such section.

(2) Section 1886(d)(10) is amended--

(A) in subparagraph (B)(i) by striking `representatives' and in serting `representative';

(B) in subparagraph (B)(i) by striking `1 member shall be a mem ber of the Prospective Payment Assessment Commission, and at least'; and

(C) in subparagraph (C)(iii)(II) by striking the first two sent ences and inserting in lieu thereof the following: `Appeal of decisions of the B oard shall be subject to the provisions of 5 U.S.C. section 557b'.

(h) REVIEW OF HOSPITAL REGULATIONS WITH RESPECT TO RURAL HOSPITALS-

(1) IN GENERAL- Not later than 12 months after the date of enac tment of this Act, the Secretary of Health and Human Services shall review the r equirements in regulations developed pursuant to section 1861(e) of the Social S ecurity Act to determine which requirements could be made less administratively and economically burdensome for hospitals defined in section 1886(d)(1)(B) of th e Social Security Act that are located in a rural area as defined in section 188 6(d)(2)(D) of the Social Security Act without diminishing the quality of care pr ovided by such hospitals to individuals entitled to receive benefits under part A of title XVIII of the Social Security Act. Such review shall specifically incl ude standards related to staffing requirements.

(2) REPORT- The Secretary of Health and Human Services shall re port to Congress by April 1, 1992, on the results of the review conducted under subsection (a), and include conclusions on which regulations, if any, should be modified with respect to hospitals located outside a metropolitan statistical ar ea as described in subsection (a).

(i) MEDICARE NURSING HOME REFORM PROVISIONS-

(1) NURSE AIDE TRAINING AMENDMENTS-

(A) NO COMPLIANCE ACTIONS BEFORE EFFECTIVE DATE OF FINAL RE GULATIONS--The Secretary of Health and Human Services (hereafter in this section referred to as the `Secretary') shall not take (and shall not continue) any act ion against a State under section 1864 of the Social Security Act on the basis o f the State's failure to meet the requirement of section 1819(e)(1)(A) of such A ct before the effective date of final regulations, issued by the Secretary, esta blishing requirements under section 1819(f)(2)(A)(iv)(I) of such Act, if the Sta te demonstrates to the satisfaction of the Secretary that it has made a good fai th effort to meet such requirement before such effective date.

(B) PART TIME NURSE AIDES NOT ALLOWED DELAY IN TRAINING- Se ction 1819(b)(5)(A) (42 U.S.C. 1395i-3(b)(5)(A)) is amended--

(i) by striking `, temporary, per diem, or other';

(ii) by inserting `(i)' after `(A)';

(iii) by redesignating clauses `(i)' and `(ii)' as subc lauses `(I)' and `(II)' respectively; and

(iv) by adding at the end the following:

`(ii) EXCEPTION- A skilled nursing facility must not us e on a temporary, per diem, or on any other than a full-time basis any individua l as a nurse aide in the facility on or after October 1, 1990, unless the indivi dual meets the requirements described in subclauses (I) and (II) of clause (i).' .

(B) CLARIFICATION OF PERMISSIBLE CHARGES FOR TRAINING OF AI DES NOT YET EMPLOYED BY A FACILITY- Section 1819(f)(2)(A)(iv)(II) (42 U.S.C. 139 5i-3(f)(2)(A)(iv)(II)) is amended by striking `such program' and inserting `such program, except, that on accredited nonfacility based program may impose such c harges on individuals who are not presently employed by a nursing facility or wh o have not yet had an offer for future employment at such a facility'.

(C) NURSE AIDE REGISTRY-

(i) IN GENERAL- Section 1819(b)(5)(C) (42 U.S.C. 1395i- 3(b)(5)(C)) is amended by adding at the end thereof the following new sentence: `In the case of an individual who a nursing facility is considering employing as a nurse aide and who the facility has reason to believe is from a State other t han the State in which the facility is located, such a facility shall not use su ch an individual as a nurse aide unless the facility has inquired concerning suc h individual of the State registry established under subsection (e)(2)(A) of the State from which such facility has reason to believe such individual resided'.

(ii) DEEMED AIDES TO BE INCLUDED ON REGISTRY- Section 1 819(e)(2)(A) (42 U.S.C. 1395i-3(e)(2)(A)) is amended by striking `individuals' a nd inserting `individuals (including those individuals deemed under section 6901 (b)(4) (B), (C), and (D) of the Omnibus Budget Reconciliation Act of 1989 to ha ve satisfied the training and competency evaluation program requirements under t his section)'.

(2) MISCELLANEOUS AND TECHNICAL AMENDMENTS-

(A) RESIDENT ACCESS TO CLINICAL RECORDS- Section 1819(c)(1) (A)(iv) (42 U.S.C. 1395i-3(c)(1)(A)(iv)) is amended by inserting before the peri od at the end the following: `and access to current clinical records of the resi dent promptly upon reasonable request (as defined by the Secretary) by the resi dent or resident's legal representative'.

(B) MAINTAINING REGULATORY STANDARDS FOR CERTAIN NURSING AN D RELATED SERVICES- The Secretary shall provide that any regulations promulgated by the Secretary with respect to nursing and related services described in clau ses (ii), (iv), and (v) of section 1819(b)(4)(A) of the Social Security Act, are comparable or more strict in terms of requirements for such services that such regulations for such services were prior to the enactment of the Omnibus Budget Reconciliation Act of 1987.

(C) STUDY- The Secretary shall conduct a study on the hirin g and dismissal practices of nursing facilities with respect to social workers, dieticians, activities professionals, and medical records practitioners, and rep ort to Congress by January 1, 1993, on whether facilities have on their staffs, persons with significantly different credentials as a result of new regulations that became effective October 1, 1990, and the impact of staff composition on qu ality of care.

(D) CLARIFICATION OF STATE RESPONSIBILITY TO DETERMINE COMP ETENCY- Section 1819(f)(2)(B) (42 U.S.C. 1395i-3(f)(2)(B)) is amended, in the se cond sentence, by inserting `(through subcontract or otherwise)' after `may not delegate'.

(E) OMBUDSMAN PROGRAM COORDINATION WITH STATE MEDICAID AND SURVEY AND CERTIFICATION AGENCIES- Section 1819(g)(5)(B) (42 U.S.C. 1395i-3(g)(5 )(B)) is amended to read as follows:

`(B) NOTICE TO OMBUDSMAN- Each State agency with an agreeme nt with the Secretary under this section shall enter into a written agreement wi th the Office of the State Long-Term Care Ombudsman (as defined by the Older Ame ricans Act), to provide for information exchange, case referral, and prompt noti fication of the office of any adverse action to be taken against a nursing facil ity.'.

(F) ADDITIONAL REQUIREMENTS WITH RESPECT TO MEDICARE NURSE STAFFING WAIVERS- Section 1819(b)(4)(C)(ii) (42 U.S.C. 1395i-3(b)(4)(C)(ii)) is amended by adding at the end thereof the following: `The Secretary shall provide notice of the waiver to the appropriate State and substate long-term care ombud sman, to the protection and advocacy system and other appropriate State and priv ate agencies, and shall ensure that a nursing facility that is granted such a wa iver is required to make reasonable efforts to notify present and prospective re sidents of the facility (or a guardian or legal representative of such residents ) of the waiver.'.

(G) STUDY ON STAFFING REQUIREMENTS IN SKILLED NURSING FACILITIE S- The Secretary shall conduct a study and report to Congress no later than Janu ary 1, 1992, on the appropriateness of establishing minimum caregiver to residen t ratios and minimum supervisor to caregiver ratios for skilled nursing faciliti es receiving payments under title XVIII of the Social Security Act. If the Secre tary determines that the establishment of such minimum ratios is advisable, the Secretary shall specify in the report provided for in this subsection appropriat e ratios or standards.

(H) PERIOD FOR RESIDENT ASSESSMENT- Section 1819(b)(3)(C)(i )(I) (42 U.S.C. 1395i-3(b)(3)(C)(i)(I)) is amended by striking `4 days' and inse rting `14 days'.

(I) QUALIFICATION OF MEDICARE FACILITIES TO PROVIDE NURSE A IDE TRAINING AND COMPETENCY EVALUATION- Section 1819(f)(2) (42 U.S.C. 1395i-3(f) (2)) is amended--

(i) in subparagraph (B)(iii), by amending subclause (I) to read as follows:

`(I) offered by or in a skilled nursing facility de scribed in subparagraph (C), or'; and

(ii) by adding after subparagraph (B) the following new subparagraph:

`(C) SKILLED NURSING FACILITIES INELIGIBLE TO OFFER PROGRAM S- A skilled nursing facility shall be ineligible to offer a program under this paragraph--

`(i) if at any time on or after October 1, 1988, the Se cretary or a State agency administering a program under title XIX terminated or terminates the facility's provider agreement under this title or title XIX, unti l after the end of a period of at least two years following reinstatement, durin g which period--

`(I) no survey or investigation finds any deficienc ies warranting termination, and

`(II) at least one standard survey is conducted pur suant to subsection (g); or

`(ii) if the facility--

`(I) received a notice of termination of its provid er agreement under this title or title XIX from the Secretary or a State agency at any time during the one-year period ending September 30, 1990; or

`(II) is found, pursuant to a standard survey or in vestigation under subsection (g) or section 1919(g), to have deficiencies result ing in a civil monetary penalty in excess of $5,000 denial of payment, or appoin tment of temporary management pursuant to subsection (h)(2)(B) or to section 191 9(h)(2)(A),

until after the completion of a subsequent standard surve y under subsection (g) which finds no such deficiencies.'.

(J) RETRAINING REQUIRED- Section 1819(b)(5)(D) (42 U.S.C. 1 395i-3(b)(5)(D)) is amended by inserting before the period the following: `, or a new competency evaluation program'.

(K) CHARGES FOR NURSE AID TRAINING- Section 1819(f)(2)(A)(i v) (42 U.S.C. 1395i-3(f)(2)(A)(iv)) is amended by adding the following at the en d:

`(III) For individuals employed or under contract f or employment as a nurse aide within 12 months after successful completion of a nonfacility-based, State-approved nurse aide training and competency evaluation program, the State must ensure that the costs incurred by such individuals for s uch programs are reimbursed to such individuals.'.

(3) EFFECTIVE DATES- The amendments made by this section shall take effect as if they were included in the enactment of the Omnibus Budget Reco nciliation Act of 1987.

(j) NO RESTANDARDIZING FOR RECENT ADJUSTMENTS-

(1) ADJUSTMENTS UNDER OBRA 1989- Section 1886(d)(2)(C)(iv) (42 U.S.C. 1395ww(d)(2)(C)(iv)) is amended by striking the period at the end and ins erting the following: `, except that the Secretary shall not exclude additional payments under such paragraph made as a result of the enactment of section 6003( c) of the Omnibus Budget Reconciliation Act of 1989.'.

(2) EFFECTIVE DATE- The amendment made by subparagraph (D)(i) s hall take effect as if included in the enactment of the Omnibus Budget Reconcili ation Act of 1989.

PART 2--PROVISIONS RELATING ONLY TO PART B

Subpart A--Payment for Physicians' Services

SEC. 6111. REDUCTION IN PAYMENTS FOR OVERVALUED PROCEDURES.

(a) PREVIOUSLY IDENTIFIED PROCEDURES- Section 1842(b) (42 U.S.C. 13 95u(b)) is amended by adding at the end the following:

`(16)(A) In determining the reasonable charge for a physicians' service specified in paragraph (14)(C)(i) and furnished during 1991, the prevai ling charge for such service shall not exceed the prevailing charge otherwise re cognized for such service for the period during 1990 beginning on April 1, reduc ed by 15 percent or, if less, one-third of the percent (if any) by which such pr evailing charge exceeds the locally-adjusted reduced prevailing amount (as deter mined under subparagraph (B)(i)) for the service.

`(B) For purposes of this paragraph:

`(i) The `locally-adjusted reduced prevailing amount' for a locality for a physicians' service is equal to the product of--
< /ul>
`(I) the reduced national weighted average prevailing c harge for the service (specified in clause (ii)), and

`(II) the adjustment factor (specified in clause (iii)) for the locality for the service.

`(ii) The `reduced national weighted average prevailing cha rge' for a physicians' service is equal to the national weighted average prevail ing charge for the service (specified in subparagraph (C)(i)) reduced by the per centage change (specified in subparagraph (C)(ii)) for the service.

`(iii) The `adjustment factor' for a locality for a physici ans' service is the sum of--

`(I) the practice expense component percent (divided by 100) for the service specified in paragraph (14)(B)(iii)(I), multiplied by the geographic practice cost index value specified for the locality in paragraph (14 )(C)(iv), and

`(II) 1 minus the practice expense component percent (d ivided by 100) for the service, multiplied by the geographic work index value s pecified for the locality in Addendum C to the Model Fee Schedule for Physician Services (published on September 4, 1990, 55 Federal Register pp. 36238-36243).

`(C) For purposes of this paragraph:

`(i)(I) The `national weighted average prevailing charge' s pecified in this clause, for a physicians' service specified in paragraph (14)(C )(i), is the national weighted average prevailing charge for the service in 1989 as determined by the Secretary using the best data available.

`(II) For purposes of determining the national weighted ave rage prevailing charge for a service under subclause (I), the Secretary shall ad just the prevailing charge for the service for each locality by the adjustment f actor (specified in subparagraph (B)(iii)) for that locality.

`(ii) The `percent change' specified in this clause, for a physicians' service specified in clause (i), is the percent change specified in paragraph (14)(C)(iii).'.

(b) UNSURVEYED SURGICAL AND TECHNICAL PROCEDURES- Section 1842(b), as amended by subsection (a) (42 U.S.C. 1395u(b)), is further amended by adding at the end the following new paragraph:

`(17)(A) In determining the reasonable charge for all physicians' s ervices other than physicians' services specified in subparagraph (B) furnished during 1991, the prevailing charge otherwise recognized for a locality shall be reduced by 4 percent.

`(B) For purposes of subparagraph (A), the physicians' services spe cified in this subparagraph are as follows:

`(i) Radiology, anesthesia and physician pathology services, an d physicians' services specified in paragraph (14)(C)(i).

`(ii) Primary care services specified in subsection (i)(4), hos pital inpatient medical services (HCPCS codes 90200 through 90292), consultation s (HCPCS codes 90600 through 90654), preventive medicine visits (HCPCS codes 907 50 through 90754), emergency care facility services (HCPCS codes 99062 through 9 9065), and critical care services (HCPCS codes 99160 through 99174).

`(iii) Partial, simple and subcutaneous mastectomy (HCPCS codes 19160 through 19180); tendon sheath injections and small joint arthrocentesis ( HCPCS codes 20550 through 20610); femoral fracture and trochanteric fracture tre atments (HCPCS codes 27230 through 27248); endotracheal intubation (HCPCS code 3 1500); thoracentesis (HCPCS code 32000); thoracostomy (HCPCS codes 32020 through 32036); lobectomy (HCPCS codes 32485 through 32490); aneurysm repair (HCPCS cod es 35022 through 35111); enterectomy (HCPCS code 44115); colectomy (HCPCS code 4 4151); cholecystectomy (HCPCS code 47612); cystourethroscopy (HCPCS code 52340); transurethral fulguration and resection (HCPCS codes 52606 and 52620); sacral l aminectomy (HCPCS code 63011); tympanoplasty with mastoidectomy (HCPCS codes 696 43 and 69645); and ophthalmoscopy (HCPCS codes 92225, 92250, and 92260).'.< /ul>

SEC. 6112. RADIOLOGY SERVICES.

(a) REDUCTION IN FEE SCHEDULE- Section 1834(b)(4) (42 U.S.C. 1395m( b)(4)) is amended--

(1) by redesignating subparagraphs (D) and (E) as subparagraphs (E) and (F), respectively, and

(2) by inserting after subparagraph (C) the following new subpa ragraph:

`(D) 1991 FEE SCHEDULES- For radiologist services (other th an portable X-ray services) furnished under this part during 1991, the conversio n factors used in a locality under this subsection shall be determined as follow s:

`(i) NATIONAL WEIGHTED AVERAGE CONVERSION FACTOR-

`(I) The Secretary shall estimate the national weig hted average of the conversion factors used under this subsection for services f urnished for the period during 1990 beginning April 1 using the best available d ata.

`(II) For purposes of determining the national aver age conversion factor under subclause (I), the Secretary shall adjust the conver sion factor for each locality by the adjustment factor (specified in clause (iii )) for that locality.

`(ii) REDUCED NATIONAL WEIGHTED AVERAGE- The national w eighted average estimated under clause (i) shall be reduced by 12 percent.< /ul>

`(iii) LOCAL ADJUSTMENT- Subject to clause (iv), the co nversion factor to be applied to the professional or technical component of a se rvice in a locality is the sum of--

`(I) the product of (aa) the portion of the reduced national weighted average conversion factor computed under clause (ii) which is attributable to physician work, and (bb) the geographic work index value for th e locality (specified in Addendum C to the Model Fee Schedule for Physician Serv ices (published on September 4, 1990, 55 Federal Register pp. 36238-36243)); and

`(II) the product of (aa) the remaining portion of the reduced national weighted average conversion factor computed under clause (i i), and (bb) the geographic practice cost index value specified in section 1842( b)(14)(C)(iv) for the locality.

In applying this clause with respect to the professional component of a service, 80 percent of the conversion factor shall be considered to be attributable to physician work, and with respect to the technical componen t of the service, 35 percent shall be considered to be attributable to physician work.

`(iv) MAXIMUM REDUCTION- The conversion factor to be ap plied to a locality under this subparagraph to the professional or technical com ponent of a service shall not be reduced by more than 8 percent below the conver sion factor applied in the locality under subparagraph (C) to such component.

`(v) TREATMENT OF GLOBAL FEES- In applying this subpara graph in the case of a global fee for a service that includes a professional and a technical component, the conversion factor to be applied is the sum of the co nversion factors for the professional and technical components of the service co mputed separately.'.

(b) REDUCTION IN PREVAILING CHARGE LEVEL FOR OTHER RADIOLOGY SERVIC ES-

(1) IN GENERAL- In applying part B of title XVIII of the Social Security Act, the prevailing charge for physicians' services, furnished during 1991, which are radiology services may not exceed the fee schedule amount estab lished under section 1834(b) of such Act with respect to such services.

(2) EXCEPTION- Paragraph (1) shall not apply to radiology servi ces which are subject to section 6105(b) or 6108(b) of the Omnibus budget Reconc iliation Act of 1989.

(c) SPECIAL RULE FOR NUCLEAR MEDICINE SERVICES-

(1) PAYMENT FOR SERVICES FURNISHED IN 1990 AND 1991- Section 61 05(b) of the Omnibus Budget Reconciliation Act of 1989 is amended--

(A) by inserting `after March 31, 1990, and before January 1, 1992' after `furnished', and

(B) by striking all after `Act' the second place it appears and inserting `, there shall be substituted for the fee schedule otherwise appl icable a fee schedule based on 1/3 on the fee schedule computed under such sec tion (without regard to this subsection) and 2/3 on 101 percent of the 1988 pr evailing charge for such services.'.

(2) ADJUSTED HISTORICAL PAYMENT BASIS- Section 1848(a)(2)(D) (4 2 U.S.C. 1395w-4(a)(2)(D)) is amended--

(A) in clause (ii) by inserting `, but excluding nuclear me dicine services that are subject to section 6105(b) of the Omnibus Budget Reconc iliation Act of 1989' after `section 1834(b)(6))', and

(B) by adding at the end the following:

`(iii) NUCLEAR MEDICINE SERVICES- In applying clause (i ) in the case of physicians' services which are nuclear medicine services that a re subject to section 6105(b) of the Omnibus Budget Reconciliation Act of 1989, there shall be substituted for the weighted average prevailing charge the amount provided under such section.'.

(3) Section 1848(b)(2)(A) is amended by striking `section 1834( b)(6)' and inserting `section 1834(b)(6), but excluding nuclear medicine service s'.

(4) For purposes of determining the `fee schedule amount' under section 1848(a) of the Social Security Act (42 U.S.C. 1395w-4(a)) for nuclear m edicine services furnished on or after January 1, 1992, the Secretary of Health and Human Services shall apply relative values determined in accordance with the methodology utilized for other physicians' services and may not apply the relat ive values developed for such services under the fee schedule established under section 1834(b) of such Act.

(d) EXTENSION OF SPLIT BILLING RULE FOR INTERVENTIONAL RADIOLOGISTS - Section 6105(c) of the Omnibus Budget Reconciliation Act of 1989 is amended by inserting `or 1991' after `1990' each place it appears.

(e) LIMITATION ON ADJUSTMENTS- For radiologist services furnished d uring 1991 for which payment is made under section 1834(b) of the Social Securit y Act--

(1) a carrier may not make any adjustment, under section 1842(b )(3)(B) of such Act, in the payment amount for the service under section 1834(b) on the basis that the payment amount is higher than the charge applicable, for a comparable service and under comparable circumstances, to the policyholders an d subscribers of the carrier,

(2) no payment adjustment may be made under section 1842(b)(8) of such Act, and

(3) section 1842(b)(9) of such Act shall not apply.

(f) ESTABLISHMENT OF FLOOR- Section 1834(b)(4), as amended by subse ction (a), is further amended by redesignating subparagraphs (E) and (F) as subp aragraphs (F) and (G) and inserting after subparagraph (D) the following:
`(E)(i) For purposes of determining payments for radiologist servic es furnished under this part during 1991 (and the adjusted historical payment ba sis (as defined in section 1848(a)(2)(D)) for such services, the Secretary shall establish a locality-specific conversion factor floor that is equal to 80 perce nt of the national weighted average of the conversion factors used under this su bsection for radiologist services furnished during the 9-month period beginning April 1, 1990 (as determined by the Secretary using the best data available), ad justed in the manner described in subparagraph (D)(iii) for the locality.
`(ii) The conversion factor used under this subsection for services furnished in a locality during 1991 (and the adjusted historical payment basis used under section 1848) may not be less than the floor established under clause (i) for the locality.'.

SEC. 6113. ANESTHESIA SERVICES.

(a) REDUCTION IN FEE SCHEDULE- Section 1842(q)(1) (42 U.S.C. 1395u( q)(1)) is amended--

(1) by inserting `(A)' after `(q)(1)', and

(2) by adding at the end the following new subparagraph:

`(B) For physician anesthesia services furnished under this part du ring 1991, the conversion factor used in a locality under this subsection shall be determined as follows:

`(i)(I) The Secretary shall estimate the national weighted aver age of the conversion factors used under this subsection for physician anesthesi a services furnished during 1990 after March 31 using the best available data.

`(II) For purposes of determining the national average conversi on factor under subclause (I), the Secretary shall adjust the conversion factor for each locality by the adjustment factor (specified in clause (iii)) for that locality.

`(ii) The national weighted average estimated under clause (i) shall be reduced by 4 percent.

`(iii) Subject to clause (iv), the conversion factor to be appl ied in a locality is the sum of--

`(I) the product of (aa) the portion of the reduced nationa l weighted average conversion factor computed under clause (ii) which is attribu table to physician work and (bb) the geographic work index value for the localit y (specified in Addendum C to the Model Fee Schedule for Physician Services (pub lished on September 4, 1990, 55 Federal Register pp. 36238-36243)); and

`(II) the product of (aa) the remaining portion of the redu ced national weighted average conversion factor computed under clause (ii) and ( bb) the geographic practice cost index value specified in section 1842(b)(14)(C) (iv) for the locality.

In applying this clause, 70 percent of the conversion factor shal l be considered to be attributable to physician work.

`(iv) The conversion factor to be applied to a locality under this subparagraph shall not be reduced by more than 15 percent below the conversion f actor applied in the locality for the period during 1990 beginning April 1.'.

(b) EXTENSION OF REDUCTION FOR SUPERVISION OF CONCURRENT SERVICES- Subparagraphs (A) and (B) of section 1842(b)(13) (42 U.S.C. 1395u(b)(13)) are ea ch amended by striking `1991' and inserting `1996'.

(c) ESTABLISHMENT OF FLOOR- Section 1842(q)(1), as amended by subse ction (a), is further amended by adding at the end the following:

`(C)(i) For purposes of determining payments for physician anesthes ia services furnished under this part during 1991 (and the adjusted historical p ayment basis (as defined in section 1848(a)(2)(D)) for such services, the Secret ary shall establish a locality-specific conversion factor floor that is equal to 75 percent of the national weighted average of the conversion factors used unde r this subsection for physician anesthesia services furnished during the 9-month period beginning April 1, 1990 (as determined by the Secretary using the best d ata available), adjusted in the manner described in subparagraph (B)(iii) for th e locality.

`(ii) The conversion factor used under this subsection for services furnished in a locality during 1991 (and the adjusted historical payment basis used under section 1848) may not be less than the floor established under clause (i) for the locality.'.

SEC. 6114. PATHOLOGY SERVICES.

(a) REDUCTION IN PAYMENTS FOR PHYSICIAN PATHOLOGY SERVICES-
(1) IN GENERAL- Subject to paragraph (2), in determining the re asonable charge under part B of title XVIII of the Social Security Act for physi cian pathology services furnished on or after January 1, 1991, the prevailing ch arge for such service shall be 96 percent of the prevailing charge otherwise use d under such part for services furnished during 1990 after March 31 (taking into account the amendments made by this Act).

(2) LIMITATION- The prevailing charge for the technical and pro fessional components of a physician pathology service furnished by a physician t hrough an independent laboratory shall not be reduced pursuant to paragraph (1) to the extent that such reduction would reduce such prevailing charge below 115 percent of the prevailing charge for the professional component of such service when furnished by a hospital-based physician in the same locality. For purposes of the preceding sentence, an independent laboratory is a laboratory that is ind ependent of a hospital and separate from the attending or consulting physicians' office.

(b) REPEAL OF PATHOLOGY FEE SCHEDULE-

(1) Subsection (f) of section 1834 (42 U.S.C. 1395m) is repeale d.

(2) Section 1833(a)(1)(J) (42 U.S.C. 1395l(a)(1)) is amended by striking `or physician pathology services' and by striking `or section 1834(f), respectively'.

(3) Section 4050 of the Omnibus Budget Reconciliation Act of 19 87 is repealed.

(c) ADJUSTMENT- (1) The Secretary of Health and Human Services shal l provide for an appropriate adjustment to payments under section 1848(a) of the Social Security Act (42 U.S.C. 1395w-4(a)) to reflect the technical component o f furnishing physician pathology services through an independent laboratory. The adjustment shall apply to services furnished on or after January 1, 1992.< /ul>
(2) For purposes of paragraph (1), the term `independent laboratory ' means a laboratory that is independent of a hospital and separate from the att ending or consulting physician's office.

SEC. 6115. UPDATE FOR PHYSICIANS' SERVICES.

(a) PERCENTAGE INCREASE IN MEI FOR 1991 AND CUSTOMARY AND PREVAILIN G CHARGES DURING 1991-

(1) IN GENERAL- Section 1842(b)(4)(E) (42 U.S.C. 1395u(b)(4)(E) ) is amended by adding at the end the following new clause:

`(v) For purposes of this part for items and services furnished in 1991, the percentage increase in the MEI is--

`(I) 0 percent for services (other than primary care services), and

`(II) 2.0 percent for primary care services (as defined in subs ection (i)(4)).'.

(2) LIMITING UPDATE IN CUSTOMARY CHARGES- Section 1842(b)(4)(B) (42 U.S.C. 1395u(b)(4)(B)) is amended by adding at the end the following new cl ause:

`(iv) In determining the reasonable charge under paragraph (3) for physicians' services (other than primary care services, as defined in subsection (i)(4)) furnished during 1991, the customary charges shall be the same customar y charges as were recognized under this section for the 9-month period beginning April 1, 1990. In a case in which subparagraph (F) applies (relating to new phy sicians) so as to limit the customary charges of a physician during 1990 to a pe rcent of prevailing charges, the previous sentence shall not prevent such limit on customary charges under such subparagraph from increasing in 1991 to a higher percent of such prevailing charges.'.

(c) VOLUME PERFORMANCE STANDARDS- Section 1848(f)(2) (42 U.S.C. 139 5w-4(f)(2)) is amended--

(1) in subparagraph (A) by striking `the performance standard f actor (specified in subparagraph (B))' and inserting `1 percentage point for fis cal year 1991, 1 1/2 percentage points for fiscal year 1992, and 2 percentage p oints for each succeeding fiscal year', and

(2) by striking subparagraph (B) and inserting the following:

`(B) Notwithstanding subparagraph (A), the performance stan dard rate of increase for a category of physicians' services (as defined in para graph (5)) for fiscal year 1991 shall be the sum of--

`(i) the Secretary's estimate of the rate of increase i n expenditures for all physicians' services for portions of calendar years occur ring in such fiscal year (determined without regard to the amendments made by th e Omnibus Budget Reconciliation Act of 1990), and

(ii) the Secretary's estimate of the percentage increas e or decrease in expenditures for the category of services involved that will re sult from changes in law and regulations,

reduced by 2.0 percentage points.'.

SEC. 6116. NEW PHYSICIANS.

(a) EXTENSION OF CUSTOMARY CHARGE LIMIT FOR 1991- Section 1842(b)(4 )(F) (42 U.S.C. 1395u(b)(4)(F)) is amended by adding at the end the following: ` For the second and third calendar years during which the first sentence of this subparagraph no longer applies, the Secretary shall set the customary charge at a level no higher than 90 and 95 percent, respectively, of the prevailing charge for the service.'.

(b) APPLICATION UNDER FEE SCHEDULE- Section 1848(a) (42 U.S.C. 1395 w-4(a)) is amended by adding at the end the following new paragraph:

`(4) TREATMENT OF NEW PHYSICIANS- In the case of physicians' se rvices furnished by a physician before the end of the physician's first full cal endar year of furnishing services for which payment may be made under this part, and during each of the 3 succeeding years, the fee schedule amount to be applie d shall be 80 percent, 85 percent, 90 percent, and 95 percent, respectively, of the fee schedule amount applicable to physicians who are not subject to this par agraph. The preceding sentence shall not apply to primary care services or servi ces furnished in a rural area (as defined in section 1886(d)(2)) that is designa ted under section 322(a)(1)(A) of the Public Health Service Act as a health manp ower shortage area.'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to services furnished on or after January 1, 1991.

SEC. 6117. ASSISTANTS AT SURGERY.

(a) PHYSICIANS AS ASSISTANTS-AT-SURGERY- Section 1848(i) (42 U.S.C. 1395w-4(i)) is amended by adding at the end the following:

`(2) ASSISTANTS-AT-SURGERY- In the case of a surgical service f urnished by a physician, if payment is made separately under this part for the s ervices of a physician serving as an assistant-at-surgery, such payment shall no t exceed 16 percent of the amount otherwise determined under this section (or fo r 1991 under section 1842(b)(3)) for the global surgical service involved.'.

(b) EFFECTIVE DATE- The amendments made by subsections (a) and (b) shall apply with respect to services furnished on or after January 1, 1991.

SEC. 6118. ADVANCE DETERMINATIONS BY CARRIERS.

(a) IN GENERAL- Section 1842 (42 U.S.C. 1395u) is amended by insert ing after subsection (n) the following:

`(o)(1)(A) A carrier shall determine in advance whether an item or service is not allowable under section 1862(a)(1) if the item or service has bee n listed by the Secretary under paragraph (2).

`(B)(i) A carrier may in accordance with procedures established by the Secretary, determine in advance whether an item or service is not allowable under section 1862(a)(1) if--

`(I) the item or service is furnished or ordered by a physician described under paragraph (3),

`(II) the carrier notifies the physician as to the kinds of ite ms or services that will be subject to advance determination, and

`(III) the carrier provides a general notice for entities likel y to furnish the kinds of items or services described in the notification under subclause (II) that are ordered by the physician.

`(ii) A carrier may determine in advance whether an item is not all owable under section 1862(a)(1) if--

`(I) the item is furnished by an entity described under paragra ph (4), and

`(II) the carrier notifies the entity as to the kinds of items that will be subject to advance determination.

`(C) The preceding subparagraphs do not apply--

`(i) to the kinds of items and services in an area that are und er review by a utilization and quality control peer review organization, or

`(ii) in cases of a medical emergency or under such other circu mstances as the Secretary may specify.

`(2) The Secretary may list specific expensive items or services th at the Secretary finds should be subject to advance determination.

`(3) Items and services furnished or ordered by a particular physic ian are subject to paragraph (1)(B)(i) if--

`(A) a substantial number of items or services furnished or ord ered by the physician have been found not to be allowable under section 1862(a)( 1), or

`(B) a carrier has identified a pattern of overutilization resu lting from the performance or ordering practices of the physician, has so inform ed the physician, and has afforded the physician an opportunity to respond.

`(4) Items furnished by a particular entity are subject to paragrap h (1)(B)(ii) if--

`(A) a substantial number of items furnished by the entity have been found not to be allowable under section 1862(a)(1), or

`(B) a carrier has identified a pattern of overutilization resu lting from the business practices of the entity, has so informed the entity, and has afforded the entity an opportunity to respond.'.

(b) EFFECTIVE DATE- The amendments made by subsection (a) shall bec ome effective with respect to items and services furnished on or after January 1 , 1991.

SEC. 6119. LIMITATION ON BENEFICIARY LIABILITY.

Section 1848(g)(2)(A) (42 U.S.C. 1395w-4(g)(2)(A)) is amended by ad ding at the end thereof the following:

`In the case of evaluation and management services (as specified in s ection 1842(b)(17)(B)(ii)), the preceding sentence shall be applied by substitut ing `50 percent' for `25 percent'.'.

SEC. 6120. STATEWIDE FEE SCHEDULE AREAS FOR PHYSICIANS' SERVICES.

(a) IN GENERAL- Notwithstanding section 1848(j)(2) of the Social Se curity Act (42 U.S.C. 1395w-4(j)(2)), in the case of a State that meets the requ irements specified in subsection (b) on or before April 1, 1991, the Secretary o f Health and Human Services (Secretary) shall treat the State as a single fee sc hedule area for purposes of determining--

(1) the adjusted historical payment basis (as defined in sectio n 1848(a)(2)(D) of such Act (42 U.S.C. 1395w-4(a)(2)(D))), and

(2) the fee schedule amount (as referred to in section 1848(a) (42 U.S.C. 1395w-4(a)) of such Act),

for physicians' services (as defined in section 1848(j)(3) of such Ac t (42 U.S.C. 1395w-4(j)(3))) furnished on or after January 1, 1992.

(b) REQUIREMENTS- The requirements specified in this subsection are that (on or before April 1, 1991) there are written expressions of support for treatment of the State as a single fee schedule area (on a budget-neutral basis) from--

(1) each member of the congressional delegation from the State, and

(2) organizations representing urban and rural physicians in th e State.

(c) BUDGET NEUTRALITY- Notwithstanding section 1842(b)(3) of such A ct (42 U.S.C. 1395u(b)(3)), the Secretary shall provide for treatment of a State as a single fee schedule area (as described in subsection (a)) in a manner that ensures that total payments for physicians' services (as so defined) furnished by physicians in the State during 1992 are not greater or less than total paymen ts for such services would have been but for such treatment.

(d) CONSTRUCTION- Nothing in this section shall be construed as lim iting the availability (to the Secretary, the appropriate agency or organization with a contract under section 1842, or physicians in a State) of otherwise appl icable administrative procedures for modifying the fee schedule area or areas in the State after implementation of subsection (a) with respect to the State.

SEC. 6121. TECHNICAL CORRECTIONS RELATING TO PHYSICIAN PAYMENT.< /h3>
(a) COMPARABILITY AND INHERENT REASONABLENESS ADJUSTMENTS-
(1) Section 1842(b)(3)(B) (42 U.S.C. 1395u(b)(3)(B)) is amended by inserting `, subject to section 1848(i)(2),' after `such charge will be reas onable and'.

(2) Section 1848(i) is amended by adding at the end the followi ng new paragraph:

`(3) NO COMPARABILITY ADJUSTMENT- For physicians' services (inc luding radiology and anesthesia services) for which payment under this part is d etermined under this section--

`(A) a carrier may not make any adjustment in the payment a mount under section 1842(b)(3)(B) on the basis that the payment amount is higher than the charge applicable, for a comparable service and under comparable circu mstances, to the policyholders and subscribers of the carrier,

`(B) no payment adjustment may be made under section 1842(b )(8), and

`(C) section 1842(b)(9) shall not apply.'.

(b) ALLOWING PERIODIC RECOMPUTATION OF GPCI- Section 1848(e)(1) (42 U.S.C. 1395w-4(e)(1)) is amended by adding at the end the following new subpara graph:

`(C) PERIODIC RECOMPUTATION OF INDICES- The Secretary shall, from t ime to time, recompute the indices established under this paragraph based on the formula described in subparagraph (A) to reflect the most recent data available .'.

(c) OVERVALUED PROCEDURES-

(1) Section 1842(b)(14) of the Social Security Act (42 U.S.C. 1 395u(b)(14)) is amended--

(A) in subparagraph (B)(iii)(I), by striking `practice expe nse ratio for the service (specified in table #1 in the Joint Explanatory Statem ent referred to in subparagraph (C)(i))' and inserting `practice expense compone nt (percent), divided by 100, specified in Appendix A (pages 187 through 194) of the Report of the Medicare and Medicaid Health Budget Reconciliation Amendments of 1989, prepared by the Subcommittee on Health and the Environment of the Comm ittee on Energy and Commerce, House of Representatives (Committee Print 101-M, 1 01st Congress, 1st Session) for the service';

(B) in subparagraph (B)(iii)(II), by striking `practice exp ense ratio' and inserting `practice expense component (percent), divided by 100' ;

(C) in subparagraph (C)(i), by striking `physicians' servic es specified in table #2 in the Joint Explanatory Statement of the Committee of Conference submitted with the Conference Report to accompany H.R. 3299 (the `Omn ibus Budget Reconciliation Act of 1989'), 101st Congress,' and inserting `proced ures listed (by code and description) in the Overvalued Procedures List for Fina nce Committee, Revised September 20, 1989, prepared by the Physician Payment Rev iew Commission';

(D) in subparagraph (C)(iii), by striking `The `percent cha nge' specified in this clause, for a physicians' service specified in clause (i) , is the percent change specified for the service in table #2 in the Joint Expla natory Statement' and inserting `The `percentage change' specified in this claus e, for a physicians' service specified in clause (i), is the percent difference (but expressed as a positive number) specified for the service in the list'; and

(E) in subparagraph (C)(iv), by striking `such value specif ied for the locality in table #3 in the Joint Explanatory Statement referred to in clause (i)' and inserting `the Geographic Overhead Costs Index specified for the locality in table 1 of the September 1989 Supplement to the Geographic Medic are Economic Index: Alternative Approaches (prepared by the Urban Institute and the Center for Health Economics Research)'.

(2) Section 1842(b)(4)(E)(iv)(I) of such Act (42 U.S.C. 1395u(b )(4)(E)(iv)(I)) is amended by striking `Table #2' and all that follows through ` 101st Congress' and inserting `the list referred to in paragraph (14)(C)(i)'.

(3) The amendments made by paragraphs (1) and (2) apply to serv ices furnished after March 1990.

(d) MVPS AS MULTIPLICATIVE, NOT ADDITIVE- Section 1848(f)(2)(A) (42 U.S.C. 1395w-4(f)(2)(A)) is amended--

(1) in the matter preceding clause (i) by striking `sum' and in serting `product';

(2) in clauses (i) through (iv)--

(A) by inserting `1.00 plus (' before `the Secretary's' eac h place it appears, and

(B) by inserting `) divided by 100' before the comma at the end of each clause; and

(3) in the matter following clause (iv), by striking `reduced' and inserting `minus 1.0 percentage point, multiplied by 100, and reduced'.

(e) ELIMINATION OF RESTRICTION ON INCORPORATION OF TIME IN VISIT CO DES- Section 1848(c)(4) (42 U.S.C. 1395w-4(c)(4)) is amended by striking `only f or services furnished on or after January 1, 1993'.

(f) TREATMENT OF PRICE INCREASE IN DETERMINING PERFORMANCE STANDARD RATES OF INCREASE- Section 1848(f)(2)(A)(iv) (42 U.S.C. 1395w-4(f)(2)(A)(iv)) i s amended by inserting `including changes in law and regulations affecting the p ercentage increase described in clause (i)' after `law or regulations'.

(g) MISCELLANEOUS FEE SCHEDULE CORRECTIONS-

(1) CHANGES IN SECTION 1848- Section 1848 (42 U.S.C. 1395w-4) i s amended--

(A) in subsection (c), by redesignating the second paragrap h (3), and paragraphs (4) and (5), as paragraphs (4) through (6), respectively;

(B) in subsection (c)(4), as redesignated by subparagraph ( C), is amended by striking `subsection' and inserting `section';
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(C) in subsection (d)(1)--

(i) in subparagraph (A)--

(I) by inserting `(or factors)' after `conversion f actor' each place it appears in the subparagraph, and

(II) by striking `subparagraph (C)' and inserting ` paragraph (3)'; and

(ii) in subparagraph (C)--

(I) in clause (i), by striking `(or factors)'; and

(II) in clause (ii), by inserting `the conversion f actor (or factors) which will apply to physicians' services for the following ye ar and' before `the update (or updates)', and by striking `the following' and in serting `such';

(D) in subsection (d)(2)(A)--

(i) in the matter preceding clause (i) by striking `ser vices' the first place it appears and inserting `services (as defined in subsect ion (f)(5)(A))';

(ii) in clause (i) by inserting `for the services invol ved' after `section 1842(b)(3)'; and

(iii) in clause (ii)--

(I) by striking `all physicians' services (as defin ed in subsection (f)(5)(A))' and inserting `the services involved'; and

(II) by striking `all such physicians' and insertin g `such'; and

(iv) in the last sentence by striking `proportion of HM O enrollees' and inserting `proportion of individuals who are enrolled under thi s part who are HMO enrollees';

(E) in subsection (d)(2)(E)(ii)(I), by inserting `payments for' after `under this part for';

(F) in subsection (d)(3)(B)--

(i) in clause (i)--

(I) by striking `update for' and inserting `update for a category of physicians' services for'; and

(II) by striking `physicians' services (as defined in subsection (f)(5)(A))' and inserting `services in such category';

(ii) in clause (ii)--

(I) by inserting `more than' after `decrease of'; a nd

(II) in subclause (I), by striking `more than';

(G) in subsection (f)(1)--

(i) in subparagraph (A), by striking `each category' an d inserting `each category and group';

(ii) in subparagraph (C) by striking `all physicians' s ervices and for'; and

(iii) in subparagraph (D)(i) by striking `calendar year s' and inserting `portions of calendar years';

(H) in subsection (f)(2)(A)--

(i) in the matter preceding clause (i)--

(I) by striking `each' and inserting `the'; and

(II) by striking `increase' and inserting `increase for a category of physicians' services';

(ii) in subsection (f)(2)(A)(i), by striking `physician s' services (as defined in subsection (f)(5)(A))' and inserting `services in suc h category';

(iii) in subsection (f)(2)(A) (iii) by striking `physic ians' services' and inserting `services in such category'; and

(iv) in subsection (f)(2)(A)(iv) by striking `physician s' services (as defined in subsection (f)(5)(A)' and inserting `services in such category';

(I) in subsection (f)(4)--

(i) in subparagraph (A)--

(I) by striking `paragraph (B)' and inserting `subp aragraph (B)'; and

(II) by striking `after' and all that follows throu gh `1991'; and

(ii) in subparagraph (B) by striking `congress specific ally approves the plan' and inserting `specifically approved by law'.
< /ul>

(J) in subparagraphs (A) and (B) of subsection (g)(2), by i nserting `other than radiologist services subject to section 1834(b),' after `du ring 1991,' and after `during 1992,', respectively;

(K) in subsection (i)(1)(A) by striking `historical payment basis (as defined in subsection (a)(2)(C)(i))' and inserting `adjusted historic al payment basis (as defined in subsection (a)(2)(D)(i))'; and

(L) in subsection (j)(1), by striking `, and such other' an d all that follows through the period and inserting `(as defined by the Secretar y) and all other physicians' services.'.

(2) MISCELLANEOUS-

(A) Effective as if included in the Omnibus Budget Reconcil iation Act of 1989, section 6102(e)(4) of such Act is amended by striking `rate determined' after `prevailing charge'.

(B) Effective January 1, 1991, section 1842(b)(3)(G) is ame nded by striking `subsection (j)(1)(C)' and inserting `section 1848(g)(2)'.

(C) Section 1842(b)(12)(A)(ii)(II) is amended by striking ` , as the case may be'.

(D) Section 1833(a)(1)(H) is amended by striking `, as the case may be'.

(E) Section 6102(e)(11) of the Omnibus Budget Reconciliatio n Act of 1989 is amended by inserting `of Health and Human Services' after `Secr etary'.

(h) REPEAL OF REPORTS NO LONGER REQUIRED-

(1) Subsection (b) of section 4043 of the Omnibus Budget Reconc iliation Act of 1987 is repealed.

(2) Subsection (c) of section 4048 of such Act is repealed.

(3) Section 4049(b)(1) of such Act is amended by striking `, an d shall report' and all that follows up to the period at the end.

(4) Section 4056(a)(1) of such Act, as redesignated by section 411(f)(14) of the Medicare Catastrophic Coverage Act of 1988, is amended by stri king the last sentence.

(5) Section 4056(b)(2) of such Act is amended by striking the s econd sentence.

(i) ADJUSTMENT OF EFFECTIVE DATES- Effective as if included in the enactment of the Omnibus Budget Reconciliation Act of 1987--

(1) section 4048(b) of such Act is amended by striking `January 1, 1989' and inserting `March 1, 1989', and

(2) section 4049(b)(2) of such Act is amended by striking `Janu ary 1, 1989' and inserting `April 1, 1989'.

SEC. 6122. BILLING FOR SERVICES OF SUBSTITUTE PHYSICIAN.

(a) UNDER MEDICARE- Section 1842(b)(6) (42. U.S.C. 1395u(b)(6)) is amended--

(1) by striking `and' before `(C)', and

(2) by striking `involved.' and inserting `involved, and (D) in the case of services furnished (during a period that does not exceed 14 continu ous days in the case of an informal reciprocal arrangement or 90 continuous days (or such longer period as the Secretary may provide) in the case of an arrangem ent involving per diem or other fee-for-time compensation) by, or incident to th e services of, one physician to the patients of another physician who submits th e claim for such services, payment shall be made to the physician submitting the claim (as if the services were furnished by, or incident to, the physician's se rvices), but only if the claim identifies (in a manner specified by the Secretar y) the physician who furnished the services.'.

(b) UNDER MEDICAID- Section 1902(a)(32) (42 U.S.C. 1396a(a)(32))--

(1) by striking `and' before `(B)',

(2) by inserting `and' at the end of subparagraph (B), and

(3) by adding at the end the following:

`(C) in the case of services furnished (during a period tha t does not exceed 14 continuous days in the case of an informal reciprocal arran gement or 90 continuous days (or such longer period as the Secretary may provide ) in the case of an arrangement involving per diem or other fee-for-time compens ation) by, or incident to the services of, one physician to the patients of anot her physician who submits the claim for such services, payment shall be made to the physician submitting the claim (as if the services were furnished by, or inc ident to, the physician's services), but only if the claim identifies (in a mann er specified by the Secretary) the physician who furnished the services.'.< /ul>

(c) EFFECTIVE DATE- The amendments made by this section shall apply to services furnished on or after the date of the enactment of this Act.
SEC. 6123. STUDY OF PREPAYMENT MEDICAL REVIEW SCREENS.

(a) IN GENERAL- The Secretary of Health and Human Services (in this section referred to as the `Secretary') shall conduct a study of the effect of the release of prepayment medical review screen parameters on physician billings for the services to which the parameters apply.

(b) LIMITATIONS- The study shall be based upon the release of the s creen parameters at a minimum of six carrier sites.

(c) REPORT- The Secretary shall report the results of the study to the Committees on Ways and Means and Energy and Commerce of the House of Represe ntatives and the Committee on Finance of the Senate not later than October 1, 19 92.

SEC. 6124. UTILIZATION SCREENS FOR PHYSICIAN VISITS IN REHABILITATION HOSPITALS.

Not later than 180 days after the date of the enactment of this Act , the Secretary of Health and Human Services (hereafter in this section referred to as the `Secretary') shall revise the utilization screen established pursuant to section 4085(h) of the Omnibus Budget Reconciliation Act of 1987 to apply to all physician visits to an inpatient of a rehabilitation hospital or unit. Suc h screen shall reflect a standard of physician care that is comparable to the st andard of physician care recognized for inpatients of acute care hospitals and u nits, particularly with respect to the frequency of visits by an attending physi cian. The Secretary shall provide that the provisions of this section shall be i mplemented in a manner that provides that expenditures are not greater or lesser than they would have been but for the enactment of the provisions of this secti on.

SEC. 6125. STUDY OF HIGH VOLUME PAYMENT ADJUSTMENT.

(a) IN GENERAL- (1) The Secretary of Health and Human Services (in this section referred to as the `Secretary') shall conduct a study of the feasib ility and desirability of adjusting payments to individual physicians performing a high volume of a particular procedure in order to reflect the economies of sc ale afforded by volume.

(2) Taking into account the potential impact of such an adjustment on the medicare program costs and patient access to necessary services, the Comm ission shall report to the Committees on Ways and Means and Energy and Commerce of the House of Representatives and the Committee on Finance of the Senate on--

(A) the types of services or procedures for which such an adjus tment would be appropriate,

(B) options for implementing such an adjustment,

(C) appropriate exceptions to such an adjustment, and

(D) appropriate safeguards to ensure access by medicare benefic iaries to necessary services.

(b) DEADLINES FOR REPORT- The Secretary shall submit the report req uired by subsection (a) on or before July 1, 1992.

Subpart B--Payments for Other Items and Services

SEC. 6130. HOSPITAL OUTPATIENT SERVICES.

(a) REDUCTION IN PAYMENTS FOR CAPITAL-RELATED COSTS- Section 1861(v )(1)(S)(ii)(I) of the Social Security Act (42 U.S.C. 1395x(v)(1)(S)(ii)(I)) is a mended by striking `fiscal year 1990' and inserting `during the period beginning on October 1, 1989, and ending September 30, 1991 and by 10 percent for portion s of cost reporting periods occurring during the period beginning on October 1, 1991 and ending September 30, 1995'.

(b) REDUCTION IN REASONABLE COSTS OF HOSPITAL OUTPATIENT SERVICES- Section 1861(v)(1)(S)(ii) of such Act (42 U.S.C. 1395x(v)(1)(S)(ii)) is amended- -

(1) in subclause (II), by striking `1886(d)(5)(D)(iii)).' and i nserting `1886(d)(5)(D)(iii)), a rural primary care hospital (as defined in subs ection (mm)(1)), or a hospital designated under section 1820(e) as an essential access community hospital.';

(2) in subclause (III)--

(A) by striking `subclause (I)' and inserting `subclauses ( I) and (II)', and

(B) by striking `capital-related' and inserting `the';

(3) by redesignating subclauses (II) and (III) as subclauses (I II) and (IV); and

(4) by inserting after subclause (I) the following new subclaus e:

`(II) The Secretary shall reduce the reasonable cost of outpatient hospital services (other than the capital-related costs of such services) otherw ise determined pursuant to section 1833(a)(2)(B)(i)(I) by 5 percent for payments attributable to portions of cost reporting periods during the period beginning on October 1, 1990, and ending December 31, 1995.'.

(c) EXTENSION OF ASC BLEND AMOUNTS FOR EYE AND EYE AND EAR SPECIALT Y HOSPITALS- The last sentence of section 1833(i)(3)(B)(ii) (42 U.S.C. 1395l(i)( 3)(B)(ii)) is amended by striking `in fiscal year 1989 or fiscal year 1990' and inserting `on or after October 1, 1988, and before September 30, 1993'.

SEC. 6131. CLINICAL DIAGNOSTIC LABORATORY SERVICES.

(a) CAP ON ANNUAL FEE SCHEDULE INCREASES- Section 1833(h)(2)(A)(ii) (42 U.S.C. 1395l(h)(2)(A)(ii)) is amended--

(1) by striking `any other provision of this subsection' and in serting `clause (i)';

(2) by striking `and' at the end of subclause (I);

(3) by striking the period at the end of subclause (II) and ins erting `, and'; and

(4) by adding at the end the following new subclause:

`(III) the annual adjustment in the fee schedules under clause (i) for 1991 shall be a 2 percent increase.'.

(b) REDUCTION IN NATIONAL CAP- Section 1833(h)(4)(B) (42 U.S.C. 139 5l(h)(4)(B)) is amended--

(1) by striking `and' at the end of clause (ii);

(2) in clause (iii), by inserting `and before January 1, 1991,' after `1989,';

(3) by striking the period at the end of clause (iii) and inser ting `, and'; and

(4) by adding at the end the following new clause:

`(iv) after December 31, 1990, is equal to 90 percent of the me dian of all the fee schedules established for that test for that laboratory sett ing under paragraph (1).'.

SEC. 6132. DURABLE MEDICAL EQUIPMENT.

(a) DEVELOPMENT AND APPLICATION OF NATIONAL LIMITS ON FEES-
(1) INEXPENSIVE AND ROUTINELY PURCHASED DURABLE MEDICAL EQUIPME NT AND ITEMS REQUIRING FREQUENT AND SUBSTANTIAL SERVICING- Paragraphs (2) and (3 ) of section 1834(a) (42 U.S.C. 1395m(a)) are each amended--

(A) in subparagraph (B)(i), by striking `or' at the end;

(B) by striking clause (ii) of subparagraph (B) and inserti ng the following:

`(ii) in 1991 is the sum of (I) 67 percent of the local payment amount for the item or device computed under subparagraph (C)(i)(I) for 1991, and (II) 33 percent of the national limited payment amount for the item o r device computed under subparagraph (C)(ii) for 1991;

`(iii) in 1992 is the sum of (I) 33 percent of the loca l payment amount for the item or device computed under subparagraph (C)(i)(II) f or 1992, and (II) 67 percent of the national limited payment amount for the item or device computed under subparagraph (C)(ii) for 1992; and

`(iv) in 1993 and each subsequent year is the national limited payment amount for the item or device computed under subparagraph (C)(ii ) for that year.'; and

(C) by adding at the end the following new subparagraph:

`(C) COMPUTATION OF LOCAL PAYMENT AMOUNT AND NATIONAL LIMIT ED PAYMENT AMOUNT- For purposes of subparagraph (B)--

`(i) the local payment amount for an item or device for a year is equal to--

`(I) for 1991, the amount specified in subparagraph (B)(i) for 1990 increased by the covered item increase for 1991, and
< /ul>

`(II) for 1992, the amount determined under this cl ause for the preceding year increased by the covered item increase for 1992; and

`(ii) the national limited payment amount for an item o r device for a year is equal to--

`(I) for 1991, the local payment amount determined under clause (i) for such item or device for that year, except that the national limited payment amount may not exceed 100 percent of the weighted average of al l local payment amounts determined under such clause for such item for that year and may not be less than 85 percent of the weighted average of all local paymen t amounts determined under such clause for such item, and

`(II) for each subsequent year, the amount determin ed under this clause for the preceding year increased by the covered item increa se for such subsequent year.'.

(2) MISCELLANEOUS ITEMS AND OTHER COVERED ITEMS- Section 1834(a )(8) (42 U.S.C. 1395m(a)(8)) is amended--

(A) in subparagraph (A)(ii)--

(i) by striking `or' at the end of subclause (I);< /ul>

(ii) in subclause (II)--

(I) by striking `1991 or', and
< /ul>

(II) by striking `the percentage increase' and all that follows through the period and inserting `the covered item increase for the year.';

(iii) by redesignating subclause (II) as subclause (III ); and

(iv) by inserting after subclause (I) the following new subclause:

`(II) in 1991, equal to the local purchase price co mputed under this clause for the previous year, increased by the covered item in crease for 1991, and decreased by the percentage by which the average of the pur chase prices on claims submitted for all items described in paragraph (7) exceed s 110 percent of the average of the reasonable charges on claims paid for the it ems during the 6-month period ending with December 1986; or';

(B) by amending subparagraph (B) to read as follows:

`(B) COMPUTATION OF NATIONAL LIMITED PURCHASE PRICE- With r espect to the furnishing of a particular item in a year, the Secretary shall com pute a national limited purchase price--

`(i) for 1991, equal to the local purchase price comput ed under subparagraph (A)(ii) for the item for the year, except that such nation al limited purchase price may not exceed 100 percent of the weighted average of all local purchase prices for the item computed under such subparagraph for the year, and may not be less than 85 percent of the weighted average of all local p urchase prices for the item computed under such subparagraph for the year; and

`(ii) for each subsequent year, equal to the amount det ermined under this clause for the preceding year increased by the covered item i ncrease for such subsequent year.';

(C) in subparagraph (C)--

(i) by striking `regional purchase price' each place it appears and inserting `national limited purchase price',

(ii) by striking `and subject to subparagraph (D)',

(iii) in clause (ii)--

(I) by striking `75' and inserting `67'; and

(II) by striking `25' and inserting `33', and< /ul>

(iv) in clause (iii)--

(I) in subclause (I), by striking `50' and insertin g `33' and striking `subparagraph (A)(ii)(II)' and inserting `subparagraph (A)(i i)(III)'; and

(II) in subclause (II), by striking `50' and insert ing `67'; and

(D) by striking subparagraph (D).

(3) OXYGEN AND OXYGEN EQUIPMENT- Section 1834(a)(9) (42 U.S.C. 1395m(a)(9)) is amended--

(A) in subparagraph (A)(ii)(II), by striking `the percentag e increase' and all that follows through the period and inserting `the covered i tem increase for the year.';

(B) by amending subparagraph (B) to read as follows:

`(B) COMPUTATION OF NATIONAL LIMITED MONTHLY PAYMENT RATE- With respect to the furnishing of an item in a year, the Secretary shall compute a national limited monthly payment rate equal to--

`(i) for 1991, the local monthly payment rate computed under subparagraph (A)(ii)(II) for the item for the year, except that such natio nal limited monthly payment rate may not exceed 100 percent of the weighted aver age of all local monthly payment rates computed for the item under such subparag raph for the year, and may not be less than 85 percent of the weighted average o f all local monthly payment rates computed for the item under such subparagraph for the year; and

`(ii) for each subsequent year, equal to the amount det ermined under this clause for the preceding year increased by the covered item i ncrease for such subsequent year.';

(C) in subparagraph (C)--

(i) by striking `regional monthly payment rate' each pl ace it appears and inserting `national limited monthly payment rate',
< /ul>

(ii) in clause (ii)--

(I) by striking `75' and inserting `67'; and

(II) by striking `25' and inserting `33', and< /ul>

(iii) in clause (iii)--

(I) in subclause (I), by striking `50' and insertin g `33'; and

(II) in subclause (II), by striking `50' and insert ing `67' and striking `subparagraph (B)(i)' and inserting `subparagraph (B)(ii)' ; and

(D) by striking subparagraph (D).

(4) DEFINITION- Section 1834(a) (42 U.S.C. 1395m(a)) is amended by adding at the end the following new paragraph:

`(14) COVERED ITEM INCREASE- In this subsection, the term `cove red item increase' means, for 1991 and each subsequent year, the percentage incr ease in the consumer price index for all urban consumers (United States city ave rage) for the 12-month period ending with June of the previous year.'.

(5) CONFORMING AMENDMENT- Section 1834(a)(12) (42 U.S.C. 1395m( a)(12)) is amended by striking `defined for purposes of paragraphs (8)(B) and (9 )(B)'.

(b) LIMITATION ON MONTHLY RECOGNIZED RENTAL AMOUNTS FOR MISCELLANEO US ITEMS- Section 1834(a)(7)(A)(i) (42 U.S.C. 1395m(a)(7)(A)(i)) is amended--

(1) by striking `for each such month' and inserting `for each o f the first 3 months of such period'; and

(2) by striking the semicolon at the end and inserting the foll owing: `, and for each of the remaining months of such period is 7.5 percent of such purchase price;'.

(c) FREEZE IN REASONABLE CHARGES FOR ENTERAL AND PARENTERAL NUTRIEN TS, SUPPLIES, AND EQUIPMENT DURING 1991- In determining the amount of payment un der part B of title XVIII of the Social Security Act for enteral and parenteral nutrients, supplies, and equipment furnished during 1991, the charges determined to be reasonable with respect to such nutrients, supplies, and equipment may no t exceed the charges determined to be reasonable with respect to such items for 1990.

(d) OXYGEN RETESTING- Section 1834(a)(5) (42 U.S.C. 1395m(a)(5)) i s amended--

(1) in subparagraph (A), by striking `(B) and (C)' and insertin g `(B), (C), and (E)'; and

(2) by adding at the end the following new subparagraph:

`(E) RECERTIFICATION FOR PATIENTS RECEIVING HOME OXYGEN THE RAPY- In the case of a patient receiving home oxygen therapy services who, at th e time such services are initiated, has an initial arterial blood gas value at o r above a partial pressure of 55 or an arterial oxygen saturation at or above 89 percent (or such other values or saturations as the Secretary may specify), no payment may be made under this part for such services after the expiration of th e 60-day period that begins on the date the patient first received such services unless the patient's attending physician certifies that, on the basis of a foll owup test of a patient's arterial blood gas value or arterial oxygen saturation conducted during the final 15 days of such 60-day period, there is a medical nee d for the patient to continue to receive such services.'.

(e) EFFECTIVE DATE- (1) Except as provided in paragraph (2), the am endments made by this section shall apply to items furnished on or after January 1, 1991.

(2) The amendments made by subsection (d) shall apply to patients w ho first receive home oxygen therapy services on or after January 1, 1991.< /ul>
SEC. 6133. ORTHOTICS AND PROSTHETICS.

(a) MAINTAINING CURRENT PAYMENT METHODOLOGY- Section 1834 (42 U.S.C . 1395m) is amended by adding at the end the following new subsection:

`(h) PAYMENT FOR PROSTHETIC DEVICES AND ORTHOTICS AND PROSTHETICS-

`(1) GENERAL RULE FOR PAYMENT-

`(A) IN GENERAL- Payment under this subsection for prosthet ic devices and orthotics and prosthetics shall be made in a lump-sum amount for the purchase of the item in an amount equal to 80 percent of the payment basis d escribed in subparagraph (B).

`(B) PAYMENT BASIS- Except as provided in subparagraph (C), the payment basis described in this subparagraph is the lesser of--

`(i) the actual charge for the item; or
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`(ii) the amount recognized under paragraph (2) as the purchase price for the item.

`(C) EXCEPTION FOR CERTAIN PUBLIC HOME HEALTH AGENCIES- Sub paragraph (B)(i) shall not apply to an item furnished by a public home health ag ency (or by another home health agency which demonstrates to the satisfaction of the Secretary that a significant portion of its patients are low income) free o f charge or at nominal charges to the public.

`(D) EXCLUSIVE PAYMENT RULE- This subsection shall constitu te the exclusive provision of this title for payment for prosthetic devices, ort hotics, and prosthetics under this part or under part A to a home health agency.

`(2) PURCHASE PRICE RECOGNIZED- For purposes of paragraph (1), the amount that is recognized under this paragraph as the purchase price for pro sthetic devices, orthotics, and prosthetics is the amount described in subparagr aph (C) of this paragraph, determined as follows:

`(A) COMPUTATION OF LOCAL PURCHASE PRICE- Each carrier unde r section 1842 shall compute a base local purchase price for the item as follows :

`(i) The carrier shall compute a base local purchase pr ice for each item equal to the average reasonable charge in the locality for the purchase of the item for the 12-month period ending with June 1987.

`(ii) The carrier shall compute a local purchase price, with respect to the furnishing of each particular item--

`(I) in 1989 and 1990, equal to the base local purc hase price computed under clause (i) increased by the percentage increase in the consumer price index for all urban consumers (United States city average) for t he 6-month period ending with December 1987, or

`(II) in 1991, 1992 or 1993, equal to the local pur chase price computed under this clause for the previous year increased by the ap plicable percentage increase for the year.

`(B) COMPUTATION OF REGIONAL PURCHASE PRICE- With respect t o the furnishing of a particular item in each region (as defined by the Secretar y), the Secretary shall compute a regional purchase price--

`(i) for 1992 and for 1993, equal to the average (weigh ted by relative volume of all claims among carriers) of the local purchase price s for the carriers in the region computed under subparagraph (A)(ii)(II) for the year, and

`(ii) for each subsequent year, equal to the regional p urchase price computed under this subparagraph for the previous year increased b y the applicable percentage increase for the year.

`(C) PURCHASE PRICE RECOGNIZED- For purposes of paragraph ( 1) and subject to subparagraph (D), the amount that is recognized under this par agraph as the purchase price for each item furnished--

`(i) in 1989, 1990, or 1991, is 100 percent of the loca l purchase price computed under subparagraph (A)(ii);

`(ii) in 1992, is the sum of (I) 75 percent of the loca l purchase price computed under subparagraph (A)(ii)(II) for 1991, and (II) 25 p ercent of the regional purchase price computed under subparagraph (B) for 1991;

`(iii) in 1993, is the sum of (I) 50 percent of the loc al purchase price computed under subparagraph (A)(ii)(II) for 1992, and (II) 50 percent of the regional purchase price computed under subparagraph (B) for 1992; and

`(iv) in 1994 or a subsequent year, is the regional pur chase price computed under subparagraph (B) for that year.

`(D) RANGE ON AMOUNT RECOGNIZED- The amount that is recogni zed under subparagraph (C) as the purchase price for an item furnished--

`(i) in 1991, may not exceed 125 percent, and may not b e lower than 85 percent, of the average of the purchase prices recognized under such subparagraph for all the carrier service areas in the United States in that year; and

`(ii) in a subsequent year, may not exceed 120 percent, and may not be lower than 90 percent, of the average of the purchase prices rec ognized under such subparagraph for all the carrier service areas in the United States in that year.

`(3) APPLICABILITY OF CERTAIN PROVISIONS RELATING TO DURABLE ME DICAL EQUIPMENT- Subparagraphs (A) and (B) of paragraph (10), paragraph (11), an d paragraph (12) of subsection (a) shall apply to prosthetic devices, orthotics, and prosthetics in the same manner as such provisions apply to covered items un der such subsection.

`(4) DEFINITIONS- In this subsection--

`(A) the term `applicable percentage increase' means--

`(i) for 1991, 0 percent, and

`(ii) for a subsequent year, the percentage increase in the consumer price index for all urban consumers (United States city average) f or the 12-month period ending with June of the previous year;

`(B) the term `prosthetic devices' has the meaning given su ch term in section 1861(s)(8), except that such term does not include parenteral and enteral nutrition nutrients, supplies, and equipment; and

`(C) the term `orthotics and prosthetics' has the meaning g iven such term in section 1861(s)(9).'.

(b) CONFORMING AMENDMENTS- (1) Section 1832(a)(2) (42 U.S.C. 1395k( a)(2)) is amended--

(A) in subparagraphs (A) and (B), by striking `subparagraph (G) ' each place it appears and inserting `subparagraph (G) or subparagraph (I)';

(B) by striking `and' at the end of subparagraph (G);

(C) by striking the period at the end of subparagraph (H) and i nserting `; and'; and

(D) by adding at the end the following new subparagraph:

`(I) prosthetic devices and orthotics and prosthetics (desc ribed in section 1834(h)(4)) furnished by a provider of services or by others un der arrangements with them made by a provider of services.'.

(2) Section 1833(a)(1) (42 U.S.C. 1395l(a)(1)) is amended--
(A) by striking `, and (L)' and inserting `, (L)'; and

(B) by striking `subparagraph and (N)' and inserting the follow ing: `subparagraph, (M) with respect to prosthetic devices and orthotics and pro sthetics (as defined in section 1834(h)(4)), the amounts paid shall be the amoun ts described in section 1834(h)(1), and (N)'.

(3) Section 1833(a) (42 U.S.C. 1395l(a)) is amended--

(A) in paragraph (2), in the matter before subparagraph (A), by striking `and (H)' and inserting `(H), and (I)';

(B) by striking `and' at the end of paragraph (5);

(C) by striking the period at the end of paragraph (6) and inse rting `; and'; and

(D) by adding at the end the following new paragraph:

`(7) in the case of prosthetic devices and orthotics and prosth etics (as described in section 1834(h)(4)), the amounts described in section 183 4(h).'.

(4) Section 1834(a) (42 U.S.C. 1395m(a)), is amended--

(A) in the heading, by striking `, Prosthetic Devices, Orthotic s, and Prosthetics';

(B) in paragraph (2)(A), by striking `(13)(A)' and inserting `( 13)';

(C) in paragraph (6) by inserting `or prosthetic devices, and o rthotics and prosthetics described in subsection (h)' after `or (5)'; and

(D) in paragraph (13), by striking `means--' and all that follo ws and inserting the following: `means durable medical equipment (as defined in section 1861(n)), including such equipment described in section 1861(m)(5)), but does not include intraocular lenses or medical supplies (including catheters, c atheter supplies, ostomy bags, and supplies related to ostomy care) furnished by a home health agency under section 1861(m)(5).'.

(c)(1) PROHIBITION ON REGULATIONS- Notwithstanding any other provis ion of law, except as provided in paragraph (2), the Secretary of Health and Hum an Services (referred to in this subsection as the `Secretary') may not issue an y regulation that changes the coverage of conventional eye wear furnished to ind ividuals (enrolled under part B of title XVIII of the Social Security Act) follo wing cataract surgery with an intraocular lens (IOL) implant.

(2) EXCEPTION- Paragraph (1) does not apply to any regulation issue d for the sole purpose of implementing sections 1861(s)(8) and 1862(a)(7) of the Social Security Act (as amended by paragraph (3)).

(3) CLARIFYING COVERAGE OF POST-CATARACT EYEGLASSES-

(A) Section 1861(s)(8) (42 U.S.C. 1395x(s)(8)) is amended by in serting after `devices' the following `, and including one pair of corrective ey eglasses provided with intraocular lenses following cataract surgery'.

(B) Section 1862(a)(7) (42 U.S.C. 1395y(a)(7)) is amended by in serting after `eyeglasses' the first place it appears the following: `(other tha n eyeglasses described in section 1861(s)(8))'.

(d) EFFECTIVE DATE- The amendments made by this section shall apply to prosthetic devices, orthotics, and prosthetics furnished on or after January 1, 1991.

Subpart C--Miscellaneous Provisions

SEC. 6140. COMMUNITY MENTAL HEALTH CENTERS.

(a) PARTIAL HOSPITALIZATION SERVICES- (1) Section 1861(ff)(3) (42 U .S.C. 1395x(ff)(3)) is amended--

(A) by striking `(3)' and inserting `(3)(A)';

(B) by striking `outpatients' and inserting `outpatients or by a community mental health center (as defined in subparagraph (B)),'; and

(C) by adding at the end the following new subparagraph:

`(B) For purposes of subparagraph (A), the term `community mental h ealth center' means an entity--

`(i) providing the services described in section 1916(c)(4) of the Public Health Service Act; and

`(ii) meeting applicable licensing or certification requirement s for community mental health centers in the State in which it is located.'.

(2)(A) Section 1832(a)(2) (42 U.S.C. 1395k(a)(2)), as amended by se ction X124(b)(1), is amended--

(i) by striking `and' at the end of subparagraph (G);

(ii) by striking the period at the end of subparagraph (H) and inserting `; and'; and

(iii) by adding at the end the following new subparagraph:

`(I) partial hospitalization services provided by a communi ty mental health center (as described in section 1861(ff)(2)(B)).'.

(B) Section 1866(e) (42 U.S.C. 1395cc(e)) is amended by striking `i nclude a clinic' and all that follows through the period and inserting the follo wing: `include--

`(1) a clinic, rehabilitation agency, or public health agency i f, in the case of a clinic or rehabilitation agency, such clinic or agency meets the requirements of section 1861(p)(4)(A) (or meets the requirements of such se ction through the operation of section 1861(g)), or if, in the case of a public health agency, such agency meets the requirements of section 1861(p)(4)(B) (or m eets the requirements of such section through the operation of section 1861(g)), but only with respect to the furnishing of outpatient physical therapy services (as therein defined) or (through the operation of section 1861(g)) with respect to the furnishing of outpatient occupational therapy services; and

`(2) a community mental health center (as defined in section 18 61(ff)(3)(B)), but only with respect to the furnishing of partial hospitalizatio n services (as described in section 1861(ff)(1)).'.

(3) EFFECTIVE DATE- The amendments made by this subsection shall ap ply with respect to partial hospitalization services provided on or after April 1, 1991.

(b) COVERAGE OF MENTAL HEALTH PROFESSIONAL SERVICES- (1) Section 18 61(s)(2) (42 U.S.C. 1395x(s)(2)), as amended by the Omnibus Budget Reconciliatio n Act 1989, is amended--

(A) by striking `and' at the end of subparagraph (M);

(B) by adding `and' at the end of subparagraph (N); and

(C) by adding at the end of the paragraph the following new sub paragraph:

`(O) qualified mental health professional services;'.< /ul>

(2) Section 1833 (42 U.S.C. 1395l) is amended--

(A) in subsection (a)(1) by inserting after subparagraph (L) th e following new subparagraph: `, (M) with respect to qualified mental health pro fessionals under section 1861(s)(2)(O), the amounts paid shall be 80 percent of the lesser of the actual charge for the services or the amount determined by a f ee schedule established by the Secretary for the purposes of this subparagraph.' .

(B) in subsection (p), by amending the first sentence to read a s follows:

`(p) In case of--

`(1) certified nurse-midwife services;

`(2) qualified psychologists services;

`(3) clinical social worker services; and

`(4) qualified mental health professionals services,
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for which payment may be made under this part only pursuant to subpar agraphs (L), (M), (N), and (O) of section 1861(s)(2), respectively, payment may only be made under this part for such services on an assignment-related basis.'.

(3) Section 1861 (42 U.S.C. 1395x), as amended by subsection (a), i s amended by inserting after subsection (ii) the following new subsection:< /ul>
`(jj)(1) The term `qualified mental health professionals services' means such services and such services and supplies furnished as an incident to s ervices furnished by a marriage and family therapist (as defined in paragraph (2 )), or a psychiatric nurse (as defined in paragraph (3)) on-site at a community mental health center (as defined in subsection (ff)), and such services that are necessarily furnished off-site (other than at an off-site office of such therap ist, nurse, or counselor) as part of a treatment plan because of the inability o f the individual furnished such services to travel to the center by reason of ph ysical or mental impairment, because of institutionalization, or because of simi lar circumstances of the individual, which the marriage and family therapist, ps ychiatric nurse, or clinical mental health counselor is legally authorized to pe rform under State law (or the regulatory mechanism provided by State law) as wou ld otherwise be covered if furnished by a physician or as an incident to a physi cian's services.

`(2) The term `marriage and family therapist' means an individual w ho--

`(A) possesses a minimum of a masters degree in a field related to marriage and family therapy.

`(B) after obtaining such degree has performed at least 2 years of supervised clinical experience in the field of marriage and family therapy; and

`(C)(i) is licensed or certified by the State in which such ser vices are performed as a marriage and family therapist, married, family and chil d counselor, or is licensed under a similar professional title; or

`(ii) in the case of an individual in a State which does not pr ovide for licensing or certification, is eligible for clinical membership in a n ational professional association that recognized credentials for clinical member ship for marriage and family therapists (as determined by the Secretary).

`(3) The term `psychiatric nurse' means an individual who--
`(A) is licensed to practice professional nursing by the State in which such individual practices nursing;

`(B) performs such psychiatric nursing services as are authoriz ed under the law of the State in which such individual practices psychiatric nur sing; and

`(C)(i) possesses a minimum of a masters degree in nursing with a specialization in psychiatric and mental health nursing or a related field; o r

`(ii) possesses a minimum of a masters degree in a related fiel d from an accredited educational institution and is certified as a psychiatric n urse by a duly recognized national professional nurse organization, as determine d by the Secretary, or is eligible to receive such certification.'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to services performed on or after January 1, 1991.

SEC. 6141. EXTENSION OF ALZHEIMER'S DISEASE DEMONSTRATION PROJECTS.

Section 9342 of the Omnibus Budget Reconciliation Act of 1986 is am ended--

(1) in subsection (c)(1), by striking `3 years' and inserting ` 5 years', and

(2) in subsection (d)(1), by striking `third year' and insertin g `fourth year'.

SEC. 6142. CERTIFIED REGISTERED NURSE ANESTHETISTS.

Section 1833(l) (42 U.S.C. 1395l) is amended--

(1) in paragraph (1)--

(A) by inserting `(A)' after `(1)'; and

(B) by adding at the end the following:

`(B) In establishing the fee schedule under this paragraph the Secr etary may utilize a system of time units, a system of base and time units, or an y appropriate methodology.

`(C) The provisions of this subsection shall not apply to certain s ervices furnished in certain hospitals in rural areas under the provisions of se ction 9320(k) of the Omnibus Budget Reconciliation Act of 1986, as amended by se ction 6132 of the Omnibus Budget Reconciliation Act of 1989.';

(2) by striking the second sentence of paragraph (2); and< /ul>

(3) by striking paragraph (4) and inserting the following:

`(4)(A) Except as provided in subparagraphs (C) and (D), in determi ning the amount paid under the fee schedule under this subsection for services f urnished on or after January 1, 1991, by a certified registered nurse anesthetis t who is not medically directed--

`(i) the conversion factor shall be--

`(I) for services furnished in 1991, $15.50,

`(II) for services furnished in 1992, $15.75,

`(III) for services furnished in 1993, $16.00,

`(IV) for services furnished in 1994, $16.25,

`(V) for services furnished in 1995, $16.50,

`(VI) for services furnished in 1996, $16.75, and

`(VII) for services furnished in calendar years after 1995, the previous year's conversion factor increased by the update determined under section 1848(d)(3) for physician anesthesia services for that year;

`(ii) the payment areas to be used shall be the fee schedule ar eas used under section 1848 (or, in the case of services furnished during 1991, the localities used under section 1842(b)) for purposes of computing payments fo r physicians' services that are anesthesia services;

`(iii) the geographic adjustment factors to be applied to the c onversion factor under clause (i) for services in a fee schedule area or localit y is--

`(I) in the case of services furnished in 1991, the geograp hic work index value and the geographic practice cost index value specified in s ection 1842(q)(1)(B) for physicians' services that are anesthesia services furni shed in the area or locality, and

`(II) in the case of services furnished after 1991, the geo graphic work index value, the geographic practice cost index value, and the geog raphic malpractice index value used for determining payments for physicians' ser vices that are anesthesia services under section 1848,

with 70 percent of the conversion factor treated as attributable to work and 30 percent as attributable to overhead for services furnished in 199 1 (and the portions attributable to work, practice expenses, and malpractice exp enses in 1992 and thereafter being the same as is applied under section 1848).

`(B)(i) Except as provided in clause (ii) and subparagraph (D), in determining the amount paid under the fee schedule under this subsection for ser vices furnished on or after January 1, 1991, by a certified registered nurse ane sthetist who is medically directed, the Secretary shall apply the same methodolo gy specified in subparagraph (A).

`(ii) The conversion factor used under clause (i) shall be--
`(I) for services furnished in 1991, $10.50,

`(II) for services furnished in 1992, $10.75,

`(III) for services furnished in 1993, $11.00,

`(IV) for services furnished in 1994, $11.25,

`(V) for services furnished in 1995, $11.50,

`(VI) for services furnished in 1996, $11.70, and

`(VII) for services furnished in calendar years after 1996, the previous year's conversion factor increased by the update determined under sect ion 1848(d)(3) for physician anesthesia services for that year.

`(C) Notwithstanding subclauses (I) through (V) of subparagraph (A) (i)--

`(i) in the case of a 1990 conversion factor that is greater th an $16.50, the conversion factor for a calendar year after 1990 and before 1996 shall be the 1990 conversion factor reduced by the product of the last digit of the calendar year and one-fifth of the amount by which the 1990 conversion facto r exceeds $16.50; and

`(ii) in the case of a 1990 conversion factor that is greater t han $15.49 but less than $16.51, the conversion factor for a calendar year after 1990 and before 1996 shall be the greater of--

`(I) the 1990 conversion factor, or

`(II) the conversion factor specified in subparagraph (A)(i ) for the year involved.

`(D) In no case may the conversion factor used to determine payment for services in a fee schedule area or locality under this subsection, as adjus ted by the adjustment factors specified in subparagraphs (A)(iii), exceed the co nversion factor used to determine the amount paid for physicians' services that are anesthesia services in the area or locality.'.

SEC. 6143. FEDERALLY QUALIFIED HEALTH CENTERS AND RURAL HEALTH CLINIC S.

(a) COVERAGE- Section 1861(s)(2)(E) (42 U.S.C. 1395x(s)(2)(E)) is a mended by inserting `and Federally qualified health center services' after `rura l health clinic services'.

(b) SERVICES DEFINED- Section 1861(aa) (42 U.S.C. 1395x(aa)) is ame nded--

(1) in the heading, by adding at the end the following: `and Fe derally Qualified Health Center Services',

(2) in paragraph (3), by striking `paragraphs (1) and (2)' and inserting `the previous provisions of this subsection' and by redesignating such paragraph and paragraph (4) as paragraph (5) and (6), respectively, and

(3) by inserting after paragraph (2) the following new paragrap hs:

`(3) The term `Federally qualified health center services' means se rvices of the type described in subparagraphs (A) through (C) of paragraph (1) w hen furnished to an individual (who is not an inpatient) and, for this purpose, any reference to a rural health clinic or a physician described in paragraph (2) (B) is deemed a reference to a Federally qualified health center or a physician at the center, respectively.

`(4) The term `Federally qualified health center' means an entity w hich--

`(A)(i) is receiving a grant under section 329, 330, or 340 of the Public Health Service Act and which requests the Secretary to reimburse it a s a Federally qualified health center, or

`(ii)(I) is receiving funding from such a grant under a contrac t with the recipient of such a grant, and (II) meets the requirements to receive a grant under section 329, 330, or 340 of such Act;

`(B) based on the recommendation of the Health Resources and Se rvices Administration within the Public Health Service, is determined by the Sec retary to meet the requirements for receiving such a grant; or

`(C) was treated by the Secretary, for purposes of part B, as a comprehensive Federally funded health center as of January 1, 1990.'.

(c) PAYMENTS-

(1) IN GENERAL- Section 1832(a)(2)(D) (42 U.S.C. 1395k(a)(2)(D) ) is amended by inserting `(i)' after `(D)' and by inserting `and (ii) Federally qualified health center services' after `rural health clinic services'.

(2) EXCLUSION FROM PAYMENT REMOVED- Section 1862(a) (42 U.S.C. 1395y(a)) is amended--

(A) in paragraph (2), by inserting `, except in the case of Federally qualified health center services' before the semicolon at the end, an d

(B) in paragraph (3), by inserting `, in the case of Federa lly qualified health center services, as defined in section 1861(aa)(3),' after `1861(aa)(1),'.

(3) PRRB REVIEW- Section 1878 (42 U.S.C. 1395oo) is amended by adding at the end the following new subsection:

`(j) In this section, the term `provider of services' includes a ru ral health clinic and a Federally qualified health center.'.

(d) CONFORMING AMENDMENTS- Section 1861 (42 U.S.C. 1395x) is furthe r amended--

(1) in subsection (s)(2)(H)(i) and (s)(2)(K), by striking `subs ection (aa)(3)' and `subsection (aa)(4)' each place either appears inserting `su bsection (aa)(5)' and `subsection (aa)(6)', respectively, and

(2) in subsection (aa)(1)(B), by striking `paragraph (3)' and i nserting `paragraph (5)'.

(e) TEMPORARY WAIVER OF RHC STAFFING REQUIREMENTS- Section 1861(aa) (42 U.S.C. 1395x(aa)) is further amended by adding at the end the following new paragraph:

`(7)(A) The Secretary shall waive for a 1-year period the requireme nts of paragraph (2) that a rural health clinic employ a physician assistant, nu rse practitioner or certified nurse midwife or that such clinic require such pro viders to furnish services at least 50 percent of the time that the clinic opera tes for any facility that requests such waiver if the facility demonstrates that the facility has been unable, despite reasonable efforts, to hire a physician a ssistant, nurse practitioner, or certified nurse-midwife in the previous 90-day period.

`(B) The Secretary may not grant such a waiver under subparagraph ( A) to a facility if the request for the waiver is made less than 6 months after the date of the expiration of any previous such waiver for the facility.
`(C) A waiver which is requested under this paragraph shall be deem ed granted unless such request is denied by the Secretary within 60 days after t he date such request is received.'.

(f) EFFECTIVE DATE- (1) Subject to paragraph (2), the amendments ma de by this section shall apply to services furnished on or after January 1, 1991 .

(2) In the case of a Federally qualified health center that has ele cted, as of January 1, 1990, under part B of title XVIII of the Social Security Act, to have the amount of payments for services under such part determined on a reasonable-charge basis, the amendment made by subsection (c)(1) shall only app ly on and after such date (not earlier than January 1, 1991) as the center may e lect.

SEC. 6144. SEPARATE PAYMENT UNDER PART B FOR SERVICES OF CERTAIN HEAL TH PROFESSIONALS.

(a) SERVICES OF CERTAIN HEALTH PROFESSIONALS NOT TO BE INCLUDED IN INPATIENT HOSPITAL SERVICES- Section 1861(b) (42 U.S.C. 1395x(b)) is amended--

(1) in paragraph (3), by striking `(including clinical psycholo gist (as defined by the Secretary))', and

(2) in paragraph (4), by striking everything after `intern' and inserting `, services described by subsection (s)(2)(K)(i), certified nurse-mid wife services, qualified psychologist services, and services of a certified regi stered nurse anesthetist; and'.

(b) SERVICES OF CERTAIN HEALTH PROFESSIONALS NOT TO BE BILLED THROU GH PROVIDERS OF SERVICES- Section 1832(a)(2)(B)(iii) (42 U.S.C. 1395k(a)(2)(B)(i ii)) is amended to read as follows:

`(iii) services described by section 1861(s)(2)(K)(i), certified nurse-midwife services, qualified psychologist services, and services of a certified registered nurse anesthetist;'.

(c) CONFORMING AMENDMENTS-

(1) Section 1862(a)(14) (42 U.S.C. 1395y) is amended--

(A) by striking `or are services of a certified registered nurse anesthetist', and

(B) by inserting after `this paragraph)' a comma and the fo llowing: `services described by section 1861(s)(2)(K)(i), certified nurse-midwif e services, qualified psychologist services, and services of a certified registe red nurse anesthetist,'.

(2) The matter in section 1866(a)(1)(H) (42 U.S.C. 1395x(a)(1)( H)) preceding clause (i) is amended by inserting after `and other than' the foll owing: `services described by section 1861(s)(2)(K)(i), certified nurse-midwife services, qualified psychologist services, and'.

(d) EFFECTIVE DATE- The amendments made by the preceding subsection s apply to services furnished on or after January 1, 1991.

SEC. 6145. NEW TECHNOLOGY IOL'S.

(a) IN GENERAL- The Secretary of Health and Human Services (hereaft er in this section referred to as the `Secretary') shall develop and implement a process under which interested parties may request review by the Secretary of t he appropriate reimbursement under section 1833(i)(2)(A)(iii) of the Social Secu rity Act with respect to a class of new technology intraocular lenses. For purpo ses of the preceding sentence, an intraocular lens may not be treated as a new t echnology lens unless it has been approved by the Food and Drug Administration.

(b) EVALUATION BASED UPON MEDICAL BENEFITS- In determining whether to provide an adjustment of payment with respect to a particular lens under subs ection (a), the Secretary shall take into account whether use of the lens is lik ely to result in reduced risk of intraoperative or postoperative complication or trauma, accelerated postoperative recovery, reduced induced astigmatism, improv ed postoperative visual acuity, more stable postoperative vision, or other compa rable clinical advantages.

(c) NOTICE AND COMMENTS-

(1) NOTICE- The Secretary shall publish notice in the Federal R egister from time to time (but no less often than once each year) a list of the requests that the Secretary has received for review under this section.

(2) COMMENT- The Secretary shall provide for a 60-day comment p eriod on the notice under paragraph (1). The Secretary shall publish a notice of his determination with respect to intraocular lenses listed in the notice withi n 120 days after the close of the comment period.

SEC. 6146. RURAL NURSING INCENTIVES.

(a) COVERAGE OF SERVICES- Section 1861(s)(2) (42 U.S.C. 1395x(s)(2) ) is amended--

(1) by striking `and' at the end of subparagraph (L);

(2) by adding `and' at the end of subparagraph (M); and

(3) by adding at the end thereof the following new subparagraph :

`(P) nurse practitioner or clinical nurse specialist servic es;'.

(b) SERVICES DEFINED- Section 1861 (42 U.S.C. 1395x) is amended by inserting after subsection (jj) the following new subsection:

`NURSE PRACTITIONER OR CLINICAL NURSE SPECIALIST SERVICES

`(kk)(1) The term `nurse practitioner or clinical nurse specialist services' means services provided by a nurse practitioner or clinical nurse spec ialist (as defined in paragraph (2)) in a rural area (as defined in paragraph (3 )) which the nurse practitioner or clinical nurse specialist is legally authoriz ed to perform under State law (or the State regulatory mechanism provided by Sta te law) of the State in which such services are performed.

`(2) The term `nurse practitioner or clinical nurse specialist' mea ns an individual who--

`(A) is a registered nurse and is licensed to practice nursing in the State in which the nurse practitioner or clinical nurse specialist servic es are performed; and

`(B)(i) holds a master's degree in nursing or a related field f rom an accredited educational institution, or

`(ii) is certified as a nurse practitioner or clinical nurse sp ecialist by a duly recognized professional nurses association.

`(3) The term `rural area' means any area outside a metropolitan st atistical area (as defined by the Office of Management and Budget).'.

(c) DIRECT PAYMENT FOR SERVICES- Section 1832(a)(2)(B) (42 U.S.C. 1 395k(a)(2)(B)) is amended--

(1) by striking `and' at the end of clause (ii); and
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(2) by adding at the end of clause (iii) the following new clau se:

`(iv) nurse practitioner or clinical nurse specialist servi ces;'.

(d) AMOUNT OF PAYMENT FOR SERVICES- Section 1833(a)(1) (42 U.S.C. 1 395l(a)(1)) is amended--

(1) by striking `and' at the end of subparagraph (M);

(2) by adding `and' at the end of subparagraph (N); and

(3) by adding at the end thereof the following new subparagraph : `(O) in the case of nurse practitioner or clinical specialist services under s ection 1861(s)(2)(P), the amounts paid shall be an amount equal to 100 percent o f 75 percent of the prevailing charge (or, in the case of services furnished aft er 1991, the amount determined under section 1848(a)) in area for the service fo r participating physicians and such payment shall be made only on an assignment- related basis;'.

(e) EFFECTIVE DATE- The amendments made by this section shall apply with respect to services furnished on or after January 1, 1991.

PART 3--PROVISIONS RELATING TO PARTS A AND B

SEC. 6150. END STAGE RENAL DISEASE SERVICES.

(a) MAINTENANCE OF CURRENT RATES THROUGH 1992- Section 9335(a)(1) o f the Omnibus Budget Reconciliation Act of 1986, as amended by section 6203(a)(1 )(A) of the Omnibus Budget Reconciliation Act of 1989, is amended--

(1) by striking `and before October 1, 1990' and inserting `and before October 1, 1993'; and

(2) by striking `equal to' and inserting `not less than'.< /ul>

(b) PROPAC STUDY ON ESRD COMPOSITE RATES-

(1) IN GENERAL-

(A) STUDY- The Prospective Payment Assessment Commission (i n this subsection referred to as the `Commission') shall conduct a study to dete rmine the costs and services and profits associated with various modalities of d ialysis treatments provided to end stage renal disease patients provided under t itle XVIII of the Social Security Act.

(B) RECOMMENDATIONS- Based on information collected for the study described in subparagraph (A), the Commission shall make recommendations to Congress regarding the method or methods and the levels at which the payments made for the facility component of dialysis services by providers of service an d renal dialysis facilities under title XVIII of the Social Security Act should be established for dialysis services furnished during fiscal year 1993 and the m ethodology to be used to update such payments for subsequent fiscal years. In ma king recommendations concerning the appropriate methodology the Commission shal l consider--

(i) hemodialysis and other modalities of treatment,

(ii) the appropriate services to be included in such pa yments,

(iii) the adjustment factors to be incorporated includi ng facility characteristics, such as hospital versus free-standing facilities, u rban versus rural, size and mix of services,

(iv) adjustments for labor and nonlabor costs,

(v) comparative profit margins for all types of renal d ialysis providers of service and renal dialysis facilities,
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(vi) adjustments for patient complexity, such as age, d iagnosis, case mix, and pediatric services, and

(vii) efficient costs related to high quality of care a nd positive outcomes for all treatment modalities.

(2) REPORT- Not later than June 1, 1992, the Commission shall s ubmit a report to the Committee on Finance of the Senate, and the Committees on Ways and Means and Energy and Commerce of the House of Representatives on the st udy conducted under paragraph (1)(A) and shall include in the report the recomme ndations described in paragraph (1)(B), taking into account the factors describe d in paragraph (1)(B).

(3) ANNUAL REPORT- The Commission, not later than March 1 befor e the beginning of each fiscal year (beginning with fiscal year 1993) shall repo rt its recommendations to the Committee on Finance of the Senate and the Committ ees on Ways and Means and Energy and Commerce of the House of Representatives on an appropriate change factor which should be used for updating payments for ser vices rendered in that fiscal year. The Commission in making such report to Cong ress shall consider conclusions and recommendations available from the Institute of Medicine.

(c) SELF-ADMINISTERED ERYTHROPOIETIN- (1) Section 1861(s)(2) (42 U. S.C. 1395x(s)(2)) is amended--

(A) by striking `and' at the end of subparagraph (O);

(B) by adding `and' at the end of subparagraph (P); and

(C) by adding at the end the following new subparagraph:

`(Q) erythropoietin for home dialysis patients competent to use such drug without medical or other supervision with respect to the administ ration of such drug, subject to methods and standards established by the Secreta ry by regulation for the safe and effective use of such drug, and items related to the administration of such drug;'.

(2)(A) Section 1881(b)(11) (42 U.S.C. 1395rr(b)) is amended--< /ul>
(i) by striking `(11)' and inserting `(11)(A)', and

(ii) by adding at the end the following new subparagraph:< /ul>

`(B) Erythropoietin (including self-administered erythropoietin (as described in section 1861(s)(2)(Q)), when provided to a patient determined to h ave end stage renal disease, shall not be included as a dialysis service for pur poses of payment under any prospective payment amount or comprehensive fee estab lished under this section, and payment for such item shall be made separately--

`(i) in the case of erythropoietin provided by a physician, in accordance with section 1833; and

`(ii) in the case of erythropoietin provided by a provider of s ervices or a renal dialysis facility, in an amount specified by the Secretary.'.

(B) Section 1881(b) (42 U.S.C. 1395rr(b)) is further amended--

(i) in paragraph (1)--

(I) by striking `and (B)' and inserting `(B), and

(II) by striking `equipment.' and inserting `equipment, and (C) payments to a supplier of home dialysis supplies and equipment that is not a provider of services, a renal dialysis facility, or a physician for self-admin istered erythropoietin as described in section 1861(s)(2)(Q) if the Secretary fi nds that the patient receiving such drug from such a supplier can safely and eff ectively administer the drug (in accordance with the applicable methods and stan dards established by the Secretary pursuant to such section).'; and

(ii) in paragraph (2)(A), by striking `(2)(A)' and inserting `( 2)(A)(i)'; and

(iii) in paragraph (11)(B), as added by subparagraph (A)--

(I) by striking `(B)' and inserting `(B)(i)',

(II) by redesignating clauses (i) and (ii) as subclauses (I ) and (II), and

(III) by adding at the end the following new clause:

`(ii) Notwithstanding clause (i), the amount payable to a supplier of home dialysis supplies and equipment that is not a provider of services, a re nal dialysis facility, or a physician for erythropoietin shall be determined in the same manner as the amount payable to a renal dialysis facility for such item .'.

(d) EFFECTIVE DATE- The amendments made by subsection (c) shall app ly to items and services furnished on or after January 1, 1991.

SEC. 6151. STAFF-ASSISTED HOME DIALYSIS.

(a) IN GENERAL- Section 1861(s)(2)(F) (42 U.S.C. 1395x(s)(2)(F)) is amended by striking `self-care' and all that follows through `and institutional ' and inserting `home dialysis support services, home hemodialysis staff assista nce, and institutional'.

(b) PAYMENT FOR COSTS OF ASSISTANT SERVICES-

(1) IN GENERAL- Section 1881(b) of such Act (42 U.S.C. 1395rr(b )(1)) is amended--

(A) in paragraph (1)--

(i) by striking `self-care home dialysis support servic es' and inserting `home dialysis support services'; and

(ii) by striking `and routine' and inserting `services of a staff assistant provided to an individual described in subsection (h)(3) wh ich are furnished by a provider of services or facility, and routine';

(B) in paragraph (4), by amending subparagraph (A) to read as follows: `Pursuant to agreements with approved providers of services and rena l dialysis facilities, the Secretary may make payments to such providers and fac ilities for the cost of home dialysis supplies and equipment and home dialysis s upport services furnished to patients whose home dialysis is under the direct su pervision of such provider or facility, and home hemodialysis staff assistance f urnished to patients described in subsection (h)(3) whose home hemodialysis is u nder the direct supervision of a provider of services or a renal dialysis facili ty on the basis of the method established under paragraph (7).'; and

(C) in paragraph (5)--

(i) by inserting `(A)' after `paragraph (4)'; and< /ul>

(ii) by amending clause (iv) to read as follows:

`(iv) the services of a trained home hemodialysis staff assistant (as described in subsection (h)(2)) to individuals described in subse ction (h)(3);'.

(2) ESTABLISHING PAYMENT RATE- Section 1881(b)(7) of such Act ( 42 U.S.C. 1395rr(b)(7)) is amended--

(A) by redesignating subparagraphs (A), (B), (C), and (D) a s clauses (i), (ii), (iii), and (iv), respectively;

(B) by inserting `(A)' after the paragraph designation; and

(C) by adding at the end the following new subparagraph:

`(B)(i) The Secretary shall provide by regulation for a met hod of determining prospectively the amount of payment to be made for home hemod ialysis staff assistance furnished by a provider of services or a renal dialysis facility with respect to a maintenance dialysis episode.

`(ii) The amount of payment determined under clause (i) sha ll be in addition to the amount determined under subparagraph (A) on the basis o f a rate based on a single composite weighted formula (in this subparagraph refe rred to as the `composite rate').

`(iii) The amount of payment determined under clause (i) sh all be the product of the rate determined under clause (iv) with respect to a pr ovider of services or a renal dialysis facility and the factor by which the labo r portion of the rate determined under subparagraph (A) is adjusted for area dif ferences in wage levels.

`(iv) The rate determined under this clause, with respect t o a provider of services or renal dialysis facility, shall equal the amount obta ined by subtracting--

`(I) 2/2 of the labor portion of the composite rate app licable to the provider or facility (as adjusted to reflect area differences in wage levels), from

`(II) the product of the national median hourly wage fo r a home hemodialysis staff assistant and the national median time expended in t he provision of home hemodialysis staff assistant services (taking into account time expended in travel and predialysis patient care).

`(v) For purposes of clause (iv)(II)--

`(I) the national median hourly wage for a home hemodia lysis staff assistant and the national median average time expended for home hem odialysis staff assistant services shall be determined annually on the basis of the most recent data available, and

`(II) the national median hourly wage for a home hemodi alysis staff assistant shall be the sum of 65 percent of the national median hou rly wage for a licensed practical nurse and 35 percent of the national median ho urly wage for a registered nurse.'.

(c) DEFINITION AND CRITERIA RELATED TO STAFF ASSISTED HOME HEMODIAL YSIS SERVICES- Section 1881 of such Act (42 U.S.C. 1395rr) is further amended by adding at the end the following new subsection:

`(h)(1) For purposes of this title, the term `home hemodialysis sta ff assistance' means the following services provided by a home hemodialysis staf f assistant (as described in paragraph (2)) through a provider of services or a renal dialysis facility to an eligible patient (as described in paragraph (3)):

`(A) Technical assistance with the operation of a hemodialysis machine in the patient's home and with such patient's care during in-home hemodi alysis.

`(B) Administration of medications within the patient's home to maintain the patency of the extra corporeal circuit.

`(2) For purposes of this title, the term `home hemodialysis staff assistant' means those individuals who--

`(A) have met minimum qualifications as specified by the Secret ary; and

`(B) meet the minimum qualifications as specified under the law of the State in which the home hemodialysis staff assistant is providing servic es.

`(3) For purposes of this title, an `eligible patient' means those individuals who--

`(A)(i) a physician certifies as being confined to a bed or whe elchair and who cannot transfer themselves from a bed to a chair, or

`(ii) have serious medical conditions (as specified by the Secr etary) which would be exacerbated by traveling to and from a dialysis facility; and

`(B) are eligible for ambulance transportation to receive routi ne maintenance dialysis treatments, and, based on the medical condition of the p atient, there is reasonable expectation that such transportation will be used by the patient for a period of at least 6 consecutive months, such that the cost o f ambulance transportation can reasonably be expected to meet or exceed the cost of home hemodialysis staff assistance as provided under subsection (b)(4); and

`(C) have no spouse, relative, or other caregiver who either li ves with the individual or comes to such individual's home periodically and who is willing and able to assist the individual with home hemodialysis; and

`(D) the Secretary certifies annually as meeting the requiremen ts of this paragraph.

`(4) A resident of a skilled nursing facility, under this title, sh all not for purposes of this subsection be considered an `eligible patient' as d efined in paragraph (3).'.

(d) CONFORMING AMENDMENT- Section 1881(b)(9) of such Act (42 U.S.C. 1395rr(b)(9)) is amended by striking `self-care'.

(e) EFFECTIVE DATE-

(1) The amendments made by this section shall become effective (if at all) in accordance with the provisions of paragraph (2).

(2)(A)(i) The Secretary of Health and Human Services (in this s ection referred to as the `Secretary') shall establish a demonstration project t o begin January 1, 1991, to test the cost-effectiveness of furnishing home hemod ialysis staff assistance (as defined in section 1881(h)(1) of the Social Securit y Act) to eligible patients (as defined in section 1881(h)(3) of such Act) in ac cordance with the amendments made by this section.

(ii) Any individual who, on the date of the enactment of this A ct, is receiving staff assistance under the experimental authority provided unde r section 1881(f)(2) of the Social Security Act shall be deemed to be an eligibl e patient for purposes of clause (i).

(B) The number of eligible patients participating in the demons tration project established under subparagraph (A) may not exceed 550 during any month, except that one eligible patient may be admitted to the demonstration fo r each individual ceasing to participate in the project in any month.
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(C) The Secretary may implement the demonstration project estab lished under subparagraph (A) on a nationwide basis or at specific sites.

(D) The demonstration project established under subparagraph (A ) shall continue through December 31, 1993 (or the date that occurs the same num ber of days after such date as elapsed between January 1, 1991 and the first day on which services were furnished under the project).

(E)(i) The Secretary shall transmit a report of preliminary fin dings under the demonstration project to the Committees on Ways and Means and En ergy and Commerce of the House of Representatives and the Committee on Finance o f the Senate not later than January 15, 1993.

(ii) The Secretary shall transmit a final report of findings un der the demonstration project to the Committees on Ways and Means and Energy and Commerce of the House of Representatives and the Committee on Finance of the Se nate not later than December 31, 1993.

(iii) If the Secretary determines that it is not cost-effective to furnish home dialysis staff assistance, the demonstration project under this subsection shall terminate as of December 31, 1993.

(F) Any individual participating in the demonstration project e stablished under subparagraph (A) as of December 31, 1993 (or the later date des cribed in subparagraph (D)) shall continue to be eligible for home hemodialysis staff assistance after such date on the same terms and conditions as applied und er the demonstration project.

SEC. 6152. MEDICARE AS SECONDARY PAYER.

(a) EXTENSION OF TRANSFER OF DATA-

(1) Section 1862(b)(5)(C)(iii) (42 U.S.C. 1395y(b)(5)(C)(iii)) is amended by striking `September 30, 1991' and inserting `September 30, 1995'.

(2) Section 6103(l)(12)(F) of the Internal Revenue Code of 1986 is amended--

(A) in clause (i), by striking `September 30, 1991' and ins erting `September 30, 1995';

(B) in clause (ii)(I), by striking `1990' and inserting `19 94'; and

(C) in clause (ii)(II), by striking `1991' and inserting `1 995'.

(b) EXTENSION OF APPLICATION TO DISABLED BENEFICIARIES- Section 186 2(b)(1)(B)(iii) (42 U.S.C. 1395y(b)(1)(B)(iii)) is amended by striking `January 1, 1992' and inserting `October 1, 1995'.

(c) TEMPORARY EXTENSION OF ESRD PERIOD-

(1) IN GENERAL- Section 1862(b)(1)(C) (42 U.S.C. 1395y(b)(1)(C) ) is amended to read as follows:

`(C) INDIVIDUALS WITH END-STAGE RENAL DISEASE-

`(i) A group health plan (as defined in subparagraph (A)(v) ) may not take into account that an individual is entitled to benefits under thi s title solely by reason of section 226A during the 12-month period that begins with the earlier of--

`(I) the first month in which the individual becomes en titled to benefits under part A under the provisions of section 226A, or

`(II) in the case of an individual who receives a kidne y transplant, the first month in which the individual would be eligible for bene fits under part A (if the individual had filed an application for such benefits) under the provisions of section 226A(b)(1)(B).

`(ii) A group health plan (as so defined) may not different iate in the benefits it provides between individuals having end-stage renal dise ase and other individuals covered by such plan on the basis of the existence of end-stage renal disease, the need for renal dialysis, or in any other manner. Th e preceding sentence shall not prohibit a plan from taking into account that an individual is entitled to benefits under this title solely by reason of section 226A during a period occurring before or after the 12-month period described in clause (i).

`(iii) Effective for items and services furnished on or aft er February 1, 1991, and before January 1, 1996 (with respect to periods beginni ng on or after February 1, 1990), clauses (i) and (ii) shall be applied by subst ituting `24-month' for `12-month' each place it appears.'.

(2) STUDY- (A) The Comptroller General shall study and report t o the Committees on Ways and Means and Energy and Commerce of the House of Repre sentatives and the Committee on Finance of the Senate on the impact of the appli cation of clause (iii) of section 1862(b)(1)(C) of the Social Security Act (42 U .S.C. 1395y(b)(1)(C)) on individuals entitled to benefits under title XVIII of s uch Act by reason of section 226A of such Act. The report shall include informat ion relating to--

(i) the number (and geographic distribution) of such indivi duals for whom medicare is secondary,

(ii) the amount of savings to the medicare program achieved annually by reason of the application of such clause,

(iii) the effect on access to employment, and employment-ba sed health insurance, for such individuals and their family members (including c overage by employment-based health insurance of cost-sharing requirements under medicare after such employment-based insurance becomes secondary),

(iv) the effect on the amount paid for each dialysis treatm ent under employment-based health insurance, and

(v) the effect on cost-sharing requirements under employmen t-based health insurance (and on out-of-pocket expenses of such individuals) dur ing the period for which medicare is secondary.

(B) The Comptroller General shall submit a preliminary report under this subsection not later than January 1, 1993, and a final report not later th an January 1, 1995.

(d) EFFECTIVE DATES-

(1) Except as provided in paragraph (2), the amendments made by this section shall become effective on the date of the enactment of this Act.

(2)(A) The amendment made by subsection (a)(2)(B) shall apply t o requests made on or after the date of the enactment of this Act.

(B) Section 1862(b)(1)(C)(i)(I) of the Social Security Act, as amended by subsection (c), and section 1862(b)(1)(C)(iii) of such Act, as added by such subsection, shall apply to periods beginning on or after February 1, 199 0.

(C) The amendments made by subsection (d) shall be effective--

(i) on January 1, 1992, with respect to individuals describ ed in clause (ii) of subparagraph (A) of the paragraph added by paragraph (d)(1) who are covered by group health plans contributed to or sponsored by employers with 1,000 or more employees and with respect to all individuals described in cl ause (ii) of subparagraph (A) of such paragraph;

(ii) on January 1, 1993, with respect to individuals covere d by group health plans contributed to or sponsored by employers with 100 or mor e employees; and

(iii) on January 1, 1994, with respect to all other individ uals.

SEC. 6153. HEALTH MAINTENANCE ORGANIZATIONS.

(a) REQUIREMENTS WITH RESPECT TO ACTUARIAL EQUIVALENCE OF AAPCC- (1 ) Not later than January 1, 1992, the Secretary of Health and Human Services (in this section referred to as the `Secretary') shall submit a proposal to Congres s that provides for a modified payment method for organizations with a risk cont ract under section 1876(g) of the Social Security Act that is more accurate than the current payment methodology in predicting the actual service utilization an d annual medical expenditures of the beneficiary population enrolled in a specif ic organization.

(2) The proposal shall include--

(A)(i) recommendations on modifying the current adjusted averag e per capita cost formula, by adding predictors of medical utilization such as h ealth status adjustors or prior utilization measures; or

(ii) recommendations for a new payment methodology as an altern ative to the adjusted average per capita cost;

(B) data to support any recommended changes in payment methodol ogy for organizations with risk contracts under section 1876(g) of the Social Se curity Act; and

(C) data demonstrating that any proposed or revised payment met hodology under this section is effective in explaining at least 15 percent of th e variation in health care utilization and costs (as certified by the American A cademy of Actuaries) among individuals enrolled in such organizations.

(3) Not later than March 1, 1992, the Secretary shall cause to have published in the Federal Register a proposed rule providing for the implementat ion of the payment methodology specified in the proposal submitted pursuant to p aragraph (1).

(4) Not later than May 1, 1992, the Comptroller General shall revie w the proposal and recommendations made pursuant to paragraphs (1) and (2), and shall report to Congress on appropriate modifications in such payment methodolog y.

(5) Taking into account the recommendations made pursuant to paragr aph (2), on or after August 1, 1992, the Secretary shall issue a final rule impl ementing a payment methodology that meets the requirements of paragraph (1), eff ective for contract years beginning on or after January 1, 1993.

(b) WAIVER OF 50-50 REQUIREMENT WITH RESPECT TO CERTAIN ORGANIZATIO NS-

(1) IN GENERAL- The Secretary may waive the requirements of sec tion 1876(f) of the Social Security Act with respect to an organization with a r isk contract (as described in section 1876(g) of such Act) that--

(A)(i) has demonstrated profitability for the 3 most recent consecutive contract years; or

(ii) if such organization is a new organization the parent company of such organization demonstrates to the satisfaction of the Secretary t hat the solvency of such new organization is assured;

(B)(i) has had a risk contract in effect under section 1876 (g) of the Social Security Act for at least 3 years; or

(ii) if such organization is a new organization, the parent company of such organization has at least 5 years of experience in operating a health maintenance organization and two years experience in operating an organiz ation with a risk contract under section 1876(g) of the Social Security Act in t wo or more States;

(C)(i) has a total enrollment of at least 100,000 enrollees (including but not limited to individuals enrolled under title XVIII of such Ac t); or

(ii) in the case of a new organization, the organization an d any affiliated organizations have at least 100,000 of such enrollees;

(D)(i) has no significant quality problems (as determined b y the Secretary) identified by internal or external quality review; and

(ii) the organization agrees to an annual quality review co nducted by the Secretary;

(E) has agreed to fund an annual membership satisfaction su rvey to be conducted by an independent survey firm that--

(i) measures satisfaction of enrollees of such organiza tion drawn from 3 population groups including--

(I) the enrolled medicare membership;

(II) medicare members who have been discharged from a hospital within a pervious 30-day period; and

(III) former medicare members; and

(ii) reports such surveys to the Secretary; and

(F) has agreed to, within the amount charged the beneficiar y under section 1876(e), provide special services that are uniquely targeted tow ards elderly individuals receiving benefits under title XVIII of such Act and wh ich are not routinely provided to such individuals and which include--

(i) a multi-disciplinary geriatric assessment (performe d by a social worker, physician and a nurse, each who have either a specialty in geriatrics or have completed a geriatric training program) that provides for ea ch new beneficiary enrolled after the date the waiver is approved--

(I) a plan to manage specific medical conditions;

(II) objective criteria that measure--

(aa) impairment of activities of daily living (including toilet ing, eating, mobility, bathing, continence, and dressing); and
(bb) cognitive impairment; and
(ii) with respect to individuals who are determined to be dependent in 3 or more areas related to activities of daily living for at lea st 3 months (as described in clause (i)(II)) home and community based long-term care services (nonmedical services provided to prevent or delay an individual en titled to benefits under title XVIII of the Social Security Act from entering a nursing facility) that provide at least one of the following:

(I) Homemaker or chore services.

(II) Personal care services.

(III) Adult day health care.

(IV) Meals on wheels.

(V) Respite care.

(VI) Lifeline telephone assistance.
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(VII) Transportation.

(VIII) Geriatric case management.

(IX) Rehabilitation and home adaptation.
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(X) Special health education programs targeted to t he elderly.

(XI) Geriatric mental health services.

(2) DURATION OF WAIVER- A waiver under this subsection shall be approved for a 3-year period. The additional benefits (described in paragraph ( 1)) shall be made available to eligible enrollees of an organization (described in paragraph (1)) for a period of at least 3 years.

(3) REVIEW AND WITHDRAWAL BY THE SECRETARY- The Secretary shall review an organization's compliance with the terms of the waiver described in t his subsection on an annual basis. The Secretary may withdraw any waiver for an organization which the Secretary finds fails to comply with the provisions of th is subsection.

(4) EVALUATION AND REPORT- The Secretary shall evaluate the cos t and impact of any waiver granted under this subsection, including any impact o n the financial viability of an organization granted such a waiver, and shall re port to Congress, no later than 2 years after the date of enactment of this sect ion on whether any changes should be made to the enrollment requirement describe d in section 1876(f) of the Social Security Act.

(c) TEMPORARY WAIVER FOR RELATED ENTITIES-

(1) For purposes of section 1876(f), the Secretary may combine the enrolled membership of an organization that meets the requirements described in paragraph (2) with the enrollment of an HMO or CMP that has a contract under section 1876 of the Social Security Act for 2 years.

(2) An organization described in this paragraph must--

(A) be related to the organization contracting under this s ection through common ownership and control;

(B) provide services in the same geographic area through es sentially the same physicians and providers as the contracting organization;

(C) utilize a functionally integrated quality assurance pro gram; and

(D) use common grievance procedures, claims, processing sys tems, common management, and administrative services.

(d) PHYSICIAN INCENTIVE PAYMENTS-

(1) IN GENERAL- Section 1876(i) (42 U.S.C. 1395mm(i)) is amende d by adding at the end the following new paragraph:

`(8)(A) Each contract with an eligible organization under this section shall provide that the organization may not operate any physician incent ive plan (as defined in subparagraph (B) unless the following requirements are m et:

`(i) No specific payment is knowingly made under the plan d irectly to a physician or physician group as an inducement to withhold or limit medically necessary services provided with respect to an identifiable individual enrolled with the organization.

`(ii) If the plan places a physician or physician group at substantial financial risk (as determined by the Secretary) for services not pro vided by the physician or physician group, the organization--

`(I) provides stop-loss protection (or a risk corridor) for the physician or group that is adequate and appropriate, based on standards developed by the Secretary that take into account the number of physicians in t he group or under the plan that share the risk and the number of individuals enr olled with the organization who receive services from the physician or the physi cian group,

`(II) conducts periodic surveys of individuals enrolled or previously enrolled with the organization to determine the degree to which s uch individuals have access to services provided by the organization and are sat isfied with the quality of such services, and

`(III) has an internal quality assurance program that a ddresses issues of under utilization.

`(iii) The organization provides the Secretary with descrip tive information regarding the plan, sufficient to permit the Secretary to deter mine whether the plan is in compliance with the requirements of this subparagrap h.

`(B) In this paragraph, the term `physician incentive plan' mea ns any contractual compensation arrangement between an eligible organization and a physician or physician group that may directly or indirectly have the effect of reducing or limiting services provided with respect to individuals enrolled w ith the organization.'.

(2) PENALTIES- Section 1876(i)(6)(A)(vi) (42 U.S.C. 1395mm(i)(6 )(A)(vi)) is amended by striking `(g)(6)(A);' and inserting `(g)(6)(A) or paragr aph (8);'.

(3) REPEAL OF PROHIBITION- Section 1128A(b)(1) (42 U.S.C. 1320a -7a(b)(1)) is amended--

(A) by striking `, an eligible organization' and all that f ollows through `1903(m)',

(B) by adding `and' at the end of subparagraph (A),

(C) by striking subparagraph (B),

(D) by redesignating subparagraph (C) as subparagraph (B), and

(E) by striking `or organization'.

(4) EFFECTIVE DATE- The amendments made by paragraphs (1) and ( 2) shall apply with respect to contract years beginning on or after January 1, 1 992, and the amendments made by paragraph (3) shall take effect on the date of t he enactment of this Act.

(e) WAIVER OF CERTAIN HMO REQUIREMENTS-

(1) IN GENERAL- With respect to Managed Care, Inc., an affiliat e of CHP, the medical group affiliated with Long Island Jewish Medical Center, s uch group may include the enrollees of a State licensed health maintenance organ ization for whom CHP has agreed to assume full financial risk for provision of h ospital and physician services for purposes of meeting the risk contracting requ irements that at least one-half of the enrolled membership of an eligible organi zation consists of individuals who are not entitled to benefits under titles XVI II or XIX of the Social Security Act (as described in section 1876(f)(1) of the Social Security Act) and the requirement that such organizations have an enrollm ent of at least 5,000 members (as described in section 1876(g)(1) of such Act). The members of the health maintenance organization with whom Managed Care, Inc., has an agreement may not be considered for purposes of meeting any such require ments with respect to any other risk contract described in section 1876 of the S ocial Security Act.

(2) DURATION- The waiver granted under this subsection shall ex pire 2 years after the date of enactment of this Act.

(f) APPLICATION OF NATIONAL COVERAGE DECISIONS ON RISK CONTRACTS- 

(1) IN GENERAL- Section 1876(c)(2) (42 U.S.C. 1395mm(c)(2)) is amended--

(A) by redesignating clauses (i) and (ii) and subparagraphs (A) and (B) as subclauses (I) and (II) and clauses (i) and (ii), respectively;

(B) by inserting `(A)' after `(2)'; and

(C) by adding at the end the following new subparagraph:

`(B) If there is a national coverage determination made in the period beginning on the date of an announcement under subsection (a)(1)(A) and e nding on the date of the next announcement under such subsection that is project ed to result in a significant change in the costs to the organization or providi ng the benefits that are the subject of such national coverage determination (an d that has not been taken into account in determining the per capita rate of pay ment specified in the announcement)--

`(i) such determination shall not apply to risk contracts u nder this section until the first contract year that begins after the end of suc h period; and

`(ii) if such coverage determination provides for coverage of additional benefits or under additional circumstances, subsection (a)(6) shal l not apply to payment for such additional benefits or benefits provided under s uch additional circumstances during the period specified in clause (i),

unless otherwise required by law.'.

(2) CONFORMING AMENDMENT- Section 1876(a)(6) of such Act is ame nded by striking `subsection (c)(7)' and inserting `subsections (c)(2)(B)(ii) an d (c)(7)'.

(3) EFFECTIVE DATE- The amendments made by this subsection shal l apply with respect to national coverage determinations made on or after Septem ber 7, 1990.

(g) PERMITTING CONTINUOUS ENROLLMENT OF CERTAIN INDIVIDUALS- < /ul>
(1) IN GENERAL- Section 1876(a)(1)(E) (42 U.S.C. 1395mm(a)(1)(E )) is amended--

(A) by striking `(E)' and inserting `(E)(i)': and

(B) by adding at the end the following new clause:

`(ii) The Secretary may make retroactive adjustments un der clause (i) to take into account individuals enrolled during the period begin ning on the date on which the individual enrolls (and signs a written statement of enrollees' rights provided under subsection (c)(3)(E)) with an eligible organ ization (which has a risk contract under this section) under a health benefit pl an operated, sponsored, or contributed to, by the individual's employer or forme r employer (or the employer or former employer of the individual's spouse) and e nding on the date on which the individual is enrolled in the plan under this sec tion, except that for purposes of making such retroactive adjustments under this clause, such period may not exceed 90 days.'.

(2) EFFECTIVE DATE- The amendments made by paragraph (1) shall apply with respect to individuals enrolling with an eligible organization (which has a risk contract under section 1876 of the Social Security Act) under a heal th benefit plan operated, sponsored, or contributed to, by the individual's empl oyer or former employer (or the employer or former employer of the individual's spouse) on or after January 1, 1991.

(h) EXTENSION OF WAIVERS FOR SOCIAL HEALTH MAINTENANCE ORGANIZATION S- Section 4018(b)(1) of the Omnibus Budget Reconciliation Act of 1987 is amende d by striking `September 30, 1992' and inserting `December 31, 1995'.

(i) STUDY OF CHIROPRACTIC SERVICES-

(1) The Secretary shall conduct a study of the extent to which health maintenance organizations with contracts under section 1876 of the Social Security Act (42 U.S.C. 1395mm) make available to enrollees entitled to benefit s under title XVIII of such Act chiropractic services that are covered under suc h title.

(2) The study shall examine the arrangements under which such s ervices are made available and the types of practitioners furnishing such servic es to such enrollees.

(3) The study shall be based on contracts entered into or renew ed on or after January 1, 1991, and before January 1, 1993.

(4) The Secretary shall issue a final report to the Committees on Ways and Means and Energy and Commerce of the House of Representatives and th e Committee on Finance of the Senate on the results of the study not later than January 1, 1993. The report shall include recommendations with respect to any le gislative and regulatory changes that the Secretary determines are necessary to ensure access to such services.

SEC. 6154. PEER REVIEW ORGANIZATIONS.

(a) STANDARDS FOR IMPOSING SANCTIONS- Section 1156(b)(1) (42 U.S.C. 1320c-5(b)(1)) is amended--

(1) by inserting `and, if appropriate, after the practitioner o r person has been given a reasonable opportunity to enter into and complete a co rrective action plan (which may include remedial education) agreed to by the org anization, and has failed successfully to complete such plan,' after `concerned, ', and

(2) by inserting after the second sentence the following: `In d etermining whether a practitioner or person has demonstrated an unwillingness or lack of ability substantially to comply with such obligations, the Secretary sh all consider the practitioner's or person's unwillingness or lack of ability, du ring the period before the organization submits its report and recommendations, to enter into and successfully complete a corrective action plan.'.

(b) CLARIFICATION OF LIMITATION ON LIABILITY- Section 1157(b) (42 U .S.C. 1320c-6(b)) is amended--

(1) by inserting `organization having a contract with the Secre tary under this part and no' after `No',

(2) by striking `by him', and

(3) by striking `he has exercised due care' and inserting `due care was exercised in the performance of such duty, function, or activity'.

(c) INVOLVEMENT OF OPTOMETRISTS AND PODIATRISTS- Section 1154 (42 U .S.C. 1320c-3) is amended--

(1) in subsection (a)(7)(A)(i) by inserting `, optometry, and p odiatric medicine' after `dentistry', and

(2) in subsection (c) by striking `or dentistry' each place it appears and inserting `, dentistry, optometry, or podiatric medicine'.

(d) EFFECTIVE DATES-

(1) The amendments made by subsection (a) shall apply to initia l determinations made under section 1156(b)(1) of the Social Security Act (42 U. S.C. 1320c-5(b)(1)) on or after January 1, 1991.

(2) The amendments made by subsection (b) shall become effectiv e on the date of the enactment of this Act.

(3) The amendments made by subsection (c) shall apply to contra cts entered into on or after the date of the enactment of this Act.

(3) The amendments made by subsection (c) shall apply to contra cts entered into on or after the date of the enactment of this Act.

SEC. 6155. IMPROVEMENTS IN AND SIMPLIFICATION OF MEDIGAP POLICIES.

(a) SIMPLIFICATION OF MEDIGAP POLICIES- Section 1882 (42 U.S.C. 1395ss) is amended--

(1) in subsection (b)(1)(B), by striking `through (4)' and insertin g `through (5)';

(2) in subsection (c)--

(A) by striking `and' at the end of paragraph (3),

(B) by striking the period at the end of paragraph (4) and inserting `; and', and

(C) by inserting after paragraph (4) the following new para graph:

`(5) meets the requirements of subsection (o).'; and
< /ul>
(3) by adding at the end the following new subsections:

`(o) The requirements of this subsection are as follows:

`(1) Each medicare supplemental policy shall provide for covera ge of a group of benefits consistent with standards established pursuant to subs ection (p)(2).

`(2) If the medicare supplemental policy provides for coverage of a group of benefits other than the core group of basic benefits identified pu rsuant to subsection (p)(2)(B), the issuer of the policy must make available to the individual a medicare supplemental policy with only such core group of basic benefits.

`(3) The issuer of the policy has provided, before the sale of the policy, a summary information sheet which describes the benefits (including any optional benefits) under the policy, the average ratio of benefits provided to premiums collected for the most recent 3-year period in which the policy is i n effect (or, for a policy that has not been in effect for 3 years, the average ratio of benefits provided to premiums collected that is expected during the 3rd year of the policy) and which allows a direct comparison of benefits and prices among policies.

`(4) In the case of a benefit for which the premium attributabl e to that benefit is at least 75 percent of the nominal value or maximum payout of such benefit, the insurer shall disclose to any potential buyer the premium a nd the maximum payout of the benefit.

`(5)(A) Each medicare supplemental policy shall be guaranteed r enewable.

`(B) If the medicare supplemental policy is terminated by the g roup policyholder and is not replaced as provided under subparagraph (D), the is suer shall offer certificateholders an individual medicare supplemental policy w hich (at the option of the certificateholder)--

`(i) provides for continuation of the benefits contained in the group policy, or

`(ii) provides for such benefits as otherwise meets the req uirements of this section.

`(C) If an individual is a certificateholder in a group medicar e supplemental policy and the individual terminates membership in the group, the issuer shall--

`(i) offer the certificateholder the conversion opportunity described in subparagraph (B), or

`(ii) at the option of the group policyholder, offer the ce rtificateholder continuation of coverage under the group policy.
< /ul>
`(D) If a group medicare supplemental policy is replaced by ano ther group medicare supplemental policy purchased by the same policyholder, the succeeding issuer shall offer coverage to all persons covered under the old grou p policy on its date of termination. Coverage under the new group policy shall n ot result in any exclusion for preexisting conditions that would have been cover ed under the group policy being replaced.

`(6)(A) A medicare supplemental policy may not deny a claim for losses incurred for a preexisting condition more than 6 months after the effect ive date of coverage and may not define a preexisting condition as a condition f or which medical advice was given or treatment was recommended by or received fr om a physician more than 6 months before the effective date of coverage.

`(B) If a medicare supplemental policy or certificate replaces another such policy or certificate, any period under the policy or certificate b eing replaced during which claims were denied by reason of a preexisting conditi on, exclusion period, rating period, elimination period, or probationary period shall be credited toward any such period under the new policy or certificate.

`(p)(1) The standards established pursuant to this subsection (in t his subsection and subsection (t) referred to as `medicare supplemental insuranc e simplification standards' or `simplification standards') shall include--< /ul>
`(A) limitations on the benefits that may be offered under a me dicare supplemental policy consistent with paragraphs (2) and (3) of this subsec tion,

`(B) uniform language and format to be used with respect to suc h benefits for the purposes described in subsection (o)(3), and

`(C) transitional requirements consistent with paragraph (4).

`(2) The simplification standards established pursuant to this subs ection shall provide--

`(A) for such groups of basic benefits, or additional, optional benefits, as may be appropriate taking into account the considerations specifie d in paragraph (3) and the requirements of the succeeding subparagraphs;

`(B) for identification of a core group of basic benefits which includes only the minimum benefits required of a medicare supplemental policy ( as of the date of the enactment of this subsection and not including payment of any deductibles); and

`(C) that, subject to paragraph (5)--

`(i) if the simplification standards provide for medicare s upplemental insurance benefits to be offered as a core group of basic benefits p lus a defined list of optional additional benefits to be offered to consumers on an optional basis, then the total number of defined optional additional benefit s offered shall not exceed 10;

`(ii) if the simplification standards provide for medicare supplemental insurance benefits to be offered through defined benefit packages o r policies, then the total number of different benefit packages (counting the co re group of basic benefits and counting each combination of benefits that may be offered as a separate benefit package) that may be established shall not exceed 10; and

`(iii) if the simplification standards provide for medicare supplemental insurance benefits to be offered through defined benefits that the insurer packages as it deems appropriate, the total number of packages offered by an insurer cannot exceed 4, and the total number of benefits to be packaged m ay not exceed 10.

`(3) The limitations on benefits under paragraph (2) shall, to the extent possible--

`(A) provide for benefits that offer consumers the ability to p urchase the benefits that are available in the market as of the date of the enac tment of this subsection; and

`(B) balance the objectives of (i) simplifying the market to fa cilitate direct comparison of prices and benefits among policies, (ii) avoiding adverse selection, (iii) providing consumer choice, and (iv) promoting market st ability.

`(4) The transitional requirements of this paragraph are that the s implification standards shall not apply in the case of a medicare supplemental p olicy which was issued to a policyholder before the effective date of such stand ards.

`(5)(A) Except as provided in subparagraph (B), no State with a reg ulatory program approved under subsection (b)(1) may provide for or permit the g rouping of benefits (or language or format with respect to such benefits) under a medicare supplemental policy unless such grouping meets the applicable simplif ication standards.

`(B)(i) The State may, upon application by an insurer, waive the re quirements of this subsection to permit the issuance and sale of a medicare supp lemental policy which does not comply with the applicable simplification standar ds in order to offer new or innovative benefits as part of the policy. Any such new or innovative benefits shall be offered in a manner as approved by the State , which is consistent and practically achievable under the simplification standa rds. Such new or innovative benefits may include benefits that are not otherwise available and are cost-effective.

`(6)(A) Except as provided in subparagraph (B), this subsection sha ll not be construed as preventing a State from restricting the groups of benefit s that may be offered in medicare supplemental policies in the State.

`(B) A State with a regulatory program approved under subsection (b )(1) may not restrict under subparagraph (A) the offering of a medicare suppleme ntal policy consisting only of the core group of benefits described in paragraph (2)(B).

`(7) The Secretary may waive the application of simplification stan dards in regard to the limitation of benefits described in paragraph (1)(A) in t hose States that on the date of enactment of this subsection had in place an alt ernative simplification program.

`(8) By not later than 4 years after the date of enactment of this subsection, the Comptroller General shall submit to Congress a report describing the impact of the program on consumer protection, health benefit innovation and value of innovative benefits, consumer choice, and health care costs and shall include in the report such recommendations on the appropriate roles of the Assoc iation, States, and the Secretary in carrying out such a program as he deems app ropriate.'.

(b) REQUIRING APPROVAL OF STATE FOR SALE IN THE STATE-

(1) IN GENERAL- Section 1882(d)(4)(B) (42 U.S.C. 1395ss(d)(4)(B )) is amended by striking the second sentence.

(2) EFFECTIVE DATE- The amendment made by paragraph (1) shall a pply to policies mailed, or caused to be mailed, on and after July 1, 1991.

(c) PREVENTING DUPLICATION-

(1) IN GENERAL- Subsection (d)(3) of section 1882 (42 U.S.C. 13 95ss) is amended--

(A) in subparagraph (A)--

(i) by striking `Whoever knowingly sells' and inserting `It is unlawful for a person to sell or issue',

(ii) by striking `substantially',

(iii) by inserting `or title XIX' after `other than thi s title',

(iv) by striking `, shall be fined' and inserting `. Wh oever violates the previous sentence shall be fined', and

(v) by striking `$5,000' and inserting `$25,000'; and

(B) by amending subparagraph (B) to read as follows:

`(B)(i) It is unlawful for a person to issue or sell a medicare sup plemental policy to an individual entitled to benefits under part A or enrolled under part B, whether directly, through the mail, or otherwise, unless--
`(I) the person obtains from the individual, as part of the app lication for the issuance or purchase and on a form described in subclause (II), a written statement signed by the individual stating, to the best of the indivi dual's knowledge, what medicare supplemental policies the individual has, from w hat source, and whether the individual has applied for and been determined to be entitled to any medical assistance under title XIX, whether as a qualified medi care beneficiary (as described in section 1905(p)(1)) or otherwise, and

`(II) the written statement is accompanied by a written acknowl edgment, signed by the seller of the policy, of the request for and receipt of s uch statement.

The written acknowledgment under subclause (II) does not constitute v erification or affirmation by (or on behalf of) the seller or issuer of the trut h of any information supplied by an individual in the written statement describe d in subclause (I).

`(ii) The statement required by clause (i) shall be made on a form that--

`(I) states that a medicare-eligible individual does not need m ore than one medicare supplemental policy,

`(II) states that individuals 65 years of age or older may be e ligible for benefits under the State medicaid program under title XIX and that s uch individuals who are entitled to benefits under that program usually do not n eed a medicare supplemental policy and that benefits and premiums under any such policy shall be suspended upon request of the policyholder during the period of entitlement to benefits under such title, and

`(III) includes any telephone number established under section 1889, as well as the address and local telephone number of any counseling progra m offered by (or with the assistance of) the State, under its State insurance de partment, or under a State agency on aging for individuals considering purchase of a medicare supplemental policy and the address and local telephone number of the State medicaid office.

`(iii)(I) Except as provided in subclauses (II) and (III), if the s tatement required by clause (i) is not obtained or indicates that the individual has another medicare supplemental policy or indicates that the individual is en titled to any medical assistance under title XIX, the sale of such a policy shal l be considered to be a violation of subparagraph (A).

`(II) Subclause (I) shall not apply in the case of an individual wh o has another policy, if the individual indicates in writing, as part of the app lication for purchase, that the policy being purchased replaces such other polic y and indicates an intent to terminate the policy being replaced when the new po licy becomes effective and the issuer or seller certifies in writing that such p olicy will not, to the best of the issuer or seller's knowledge, duplicate cover age (taking into account any such replacement).

`(III) Subclause (I) also shall not apply if a State medicaid plan under title XIX pays the premiums for the policy, or pays less than an individua l's (who is described in section 1905(p)(1)) full liability for medicare cost sh aring as defined in section 1905(p)(3)(A).

`(iv) Whoever issues or sells a medicare supplemental policy in vio lation of this subparagraph shall be fined under title 18, United States Code, o r imprisoned not more than 5 years, or both, and, in addition to or in lieu of s uch a criminal penalty, is subject to a civil money penalty of not to exceed $25 ,000 for each such failure.'.

(2) SUSPENSION OF POLICIES DURING RECEIPT OF MEDICAID BENEFITS- Section 1882(o) (42 U.S.C. 1395ss(o)), as added by subsection (a), is amended b y adding at the end the following new paragraph:

`(7) Each medicare supplemental policy shall provide that benef its and premiums under the policy shall be suspended at the request of the polic yholder for the period in which the policy or certificate holder indicates that the policy or certificate holder has applied for and been determined to be entit led to medical assistance under title XIX. If such suspension occurs and if the policy or certificate holder loses entitlement to such medical assistance, cover age under such policy shall be automatically reinstituted (effective as of the d ate of termination of such entitlement) under terms described in subsection (n)( 6)(A)(ii) if the policy or certificate holder receives notice of loss of such en titlement from the policy or certificate holder within 90 days after the date of such loss.'.

(3) CONFORMING AMENDMENT- Section 1882(d)(5) is amended by inse rting `(3)(B),' after `(3)(A),'.

(4) INCREASE IN OTHER CIVIL MONEY PENALTIES- Paragraphs (1) and (4)(A) of section 1882(d) of such Act are amended by striking `$5,000' and inse rting `$25,000'.

(d) LOSS RATIOS AND REFUND OF PREMIUMS-

(1) IN GENERAL- Section 1882 (42 U.S.C. 1395ss) as amended by s ubsection (a), is further amended--

(A) in subsection (c), by amending paragraph (2) to read as follows:

`(2) meets the requirements of subsection (q);';

(B) by striking the sentence following subsection (c)(4); a nd

(C) by adding at the end the following new subsection:

`(q)(1) A medicare supplemental policy or health insurance policy m ay not be issued or sold in any State unless--

`(A) the policy can be expected (as estimated for the entire pe riod for which rates are computed to provide coverage, on the basis of incurred claims experience and earned premiums for such periods and in accordance with ac cepted actuarial principles and practices and standards developed by the Nationa l Association of Insurance Commissioners) to return to policyholders in the form of aggregate benefits provided under the policy, at least 75 percent of the agg regate amount of premiums collected in the case of group policies and at least 6 5 percent in the case of individual policies; and

`(B) the issuer of the policy provides for the issuance of a pr oportional refund, or a credit against future premiums of a proportional amount, based on the premium paid and in accordance with paragraph (3), of the amount o f premiums received necessary to assure that the ratio of aggregate benefits pro vided to the aggregate premiums collected (net of such refunds or credits) compl ies with the expectation required under subparagraph (A).

For purposes of applying subparagraph (A) only, policies issued as a result of solicitations of individuals through the mails or by mass media advert ising (including both print and broadcast advertising) shall be deemed to be ind ividual policies.

`(2)(A) Paragraph (1)(B) shall be applied with respect to each type of policy by policy number. Paragraph (1)(B) shall not apply to a policy with r espect to the first 2 years in which it is in effect. The Comptroller General, i n consultation with the National Association of Insurance Commissioners, shall s ubmit to Congress a report containing recommendations on adjustments in the perc entages under paragraph (1)(A) that may be appropriate in order to apply paragra ph (1)(B) to the first 2 years in which policies are effective.

`(B) A refund or credit required under paragraph (1)(B) shall be ma de to each policyholder insured under the applicable policy as of the last day o f the year involved.

`(C) Such a refund or credit shall include interest from the end of the policy year involved until the date of the refund at a rate as specified by the Secretary for this purpose from time to time which is not less than the ave rage rate of interest for 13-week Treasury notes.

`(D) For purposes of this paragraph and paragraph (1)(B), refunds o r credits against premiums due shall be made, with respect to a policy year, not later than the third quarter of the succeeding policy year.

`(3) The provisions of this subsection do not preempt a State from requiring a higher percentage than that specified in paragraph (1)(A).

`(4) The Comptroller General shall periodically, not less often tha n once every 3 years, perform audits with respect to the compliance of medicare supplemental policies with the requirements of paragraph (1) and shall report th e results of such audits to the State involved and to the Secretary.'.

(2) ASSURING ACCESS TO LOSS RATIO INFORMATION- Section 1882(b)( 1)(C) (42 U.S.C. 1395ss(b)(1)(C)) is amended by striking the semicolon at the en d and inserting a comma and the following:

`and that a copy of each such policy, the most recent premium for eac h such policy, and a listing of the ratio of benefits provided to premiums colle cted for the most recent 3-year period for each such policy issued or sold in th e State is maintained and made available to interested persons;'.

(3) EFFECTIVE DATE- The amendments made by this subsection shal l apply to policies sold or issued more than 1 year after the date of the enactm ent of this Act.

(e) IMPLEMENTATION OF PROCESS TO APPROVE PREMIUM INCREASES- Section 1882(b)(1) (42 U.S.C. 1395ss(b)(1)) is amended--

(1) by striking `and' at the end of subparagraph (D);

(2) by adding `and' at the end of subparagraph (E);

(3) by adding at the end thereof the following new subparagraph :

`(F) provides for a process for approving or disapproving p roposed premium increases with respect to such policies, and establishes a polic y for the holding of public hearings prior to approval of a premium increase,'.

(f) MEDICARE SELECT POLICIES-

(1) Section 1882 (42 U.S.C. 1395ss) as amended by subsection (d ), is further amended by adding at the end the following:

`(r) If a policy meets the NAIC Model Standards except that benefit s under the policy are restricted to items and services furnished by certain ent ities (or reduced benefits are provided when items or services are furnished by other entities), the policy shall nevertheless be treated as meeting those stand ards if--

`(1) full benefits are provided for items and services furnishe d through a network of entities which have entered into contracts with the issue r of the policy;

`(2) full benefits are provided for items and services furnishe d by other entities if the services are medically necessary and immediately requ ired because of an unforeseen illness, injury, or condition and it is not reason able given the circumstances to obtain the services through the network;

`(3) the network offers sufficient access; and

`(4) the issuer of the policy has arrangements for an ongoing q uality assurance program for items and services furnished through the network.'.

(2) Section 1882(c)(1) (42 U.S.C. 1395ss(c)(1)) is amended by i nserting `(except as otherwise provided by subsection (r))' before the semicolon .

(3) Section 1882(b)(1) (42 U.S.C. 1395ss(b)(1)) (as amended by subsection (e) of this Act) is further amended--

(A) in subparagraph (A), by inserting `, except as otherwis e provided by subparagraph (G)' before the semicolon;

(B) by striking `and' at the end of subparagraph (E);< /ul>

(C) by inserting `and' at the end of subparagraph (F); and

(D) by adding after subparagraph (F) the following:

`(G) in the case of a policy that meets the standards under subparagraph (A) except that benefits under the policy are limited to items and services furnished by certain entities (or reduced benefits are provided when i tems or services are furnished by other entities), provides for the application of requirements equal to or more stringent than the requirements under subsectio n (r),'.

(4)(A) Section 1882 (42 U.S.C. 1395ss) as amended by paragraph (1), is further amended by adding at the end the following:

`(s) The Secretary may enter into a contract with an entity whose p olicy has been certified under subsection (r) or has been approved by a State un der subsection (b)(1)(G) to determine whether items and services (furnished to i ndividuals entitled to benefits under this title and under that policy) are not allowable under section 1862(a)(1). Payments to the entity shall be in such amou nts as the Secretary may determine, taking into account estimated savings under contracts with carriers and fiscal intermediaries and other factors that the Sec retary finds appropriate. Paragraph (1), the first sentence of paragraph (2)(A), paragraph (2)(B), paragraph (3)(C), paragraph (3)(D), and paragraph (3)(E) of s ection 1842(b) shall apply to the entity.'.

(B) The first sentence of section 1154(a)(4)(B) (42 U.S.C. 1320 c-3(a)(4)(B)) is amended by inserting `(or subject to review under section 1882( s))' after `section 1876'.

(g) CLARIFICATION CONCERNING MEDICARE HEALTH MAINTENANCE ORGANIZATI ONS AND COMPETITIVE MEDICAL PLANS- The first sentence of section 1882(g)(1) (42 U.S.C. 1395ss(g)(1)) is amended by inserting before the period the following: `, nor any such policy or plan under a contract under section 1876'.

(h) MONITORING OF STATE MEDIGAP PROGRAMS-

(1) REVIEW BY SECRETARY- Section 1882 (42 U.S.C. 1395ss) as ame nded by subsection (f), is further amended--

(A) in subsection (b)(1), in the matter following subparagr aph (G), by striking `Panel' and inserting `Secretary';

(B) in subsection (b)(1), by adding at the end the followin g: `If the Secretary finds that a State regulatory program no longer meets the s tandards and requirements of this paragraph, before making a final determination , the Secretary shall provide the State an opportunity to adopt such a plan of c orrection as would permit the State to continue to meet such standards and requi rements.'; and

(C) in subsection (g)(2)(B), by inserting `and whose regula tory program the Secretary finds continues to meet the standards and requirement s of subsection (b)(1)' before the period.

(2) REPORTING BY STATES- Section 1882(b)(1) (42 U.S.C. 1395ss(b )(1)), as amended by subsection (f), is further amended--

(A) by striking `and' at the end of subparagraph (F);< /ul>

(B) by inserting `and' at the end of subparagraph (G);

(C) by inserting after subparagraph (G) the following:

`(H) reports to the Secretary on the implementation and enf orcement of standards and requirements of this paragraph at intervals establishe d by the Secretary,'; and

(D) by adding at the end the following new sentence: `The r eport required under subsection (H) shall include information on loss ratios of policies sold in the State, frequency and types of instances in which policies a pproved by the State fail to meet the standards of this paragraph, actions taken by the State to bring such policies into compliance, and information regarding State programs implementing consumer protection provisions, and such further inf ormation as the Secretary in consultation with the National Association of Insur ance Commissioners, may specify.'.

(i) DISCLAIMER FOR UNAPPROVED POLICIES- Section 1882(d) (42 U.S.C. 1395ss(d)) is amended--

(1) in paragraph (5), by striking `and (4)(A)' and inserting `( 4)(A), (4)(B), and (5)',

(2) by redesignating paragraph (5) as paragraph (6); and

(3) by inserting after paragraph (4) the following:

`(5)(A) If an insurer issues a medicare supplemental policy in a State without an approved regulatory program, and for which the Secretary has determined that the State does not provide consumer protection as great as would be offered under an approved program, and if that policy does not have a certif ication in effect under subsection (a), the insurer shall--

`(i) cause to be prominently displayed in at least 12 point type on any advertisement for that policy on each page of the outline of covera ge for the policy described in section 1882(o)(3), and on the first page of the policy, the following statement: `This policy has not been certified by the Secr etary of the United States Department of Health and Human Services as meeting Fe deral requirements for Medicare supplemental policies.'; and

`(ii) require the purchaser to sign the following statement : `I understand that this policy has not been certified by the Secretary of the United States Department of Health and Human Services as meeting Federal require ments for Medicare supplemental policies.'.

`(B) An insurer shall be subject to a civil monetary penalty no t to exceed $25,000 for each violation of any requirement of subparagraph (A).'.

(j) ADOPTION OF NEW STANDARDS- Section 1882 (42 U.S.C. 1395ss), as amended by subsection (f), is further amended by adding at the end the following :

`(t)(1)(A) If within 9 months after the date of enactment of this s ubsection, the National Association of Insurance Commissioners revises the NAIC Model Regulation previously promulgated for purposes of this section to incorpor ate all the requirements and standards of subsections (o), (p), (q), and (r), an d other changes in law made by the Omnibus Budget Reconciliation Act of 1990, th en subsection (g)(2)(A) shall be applied in each State, effective for policies i ssued to policyholders on and after the date specified in paragraph (3), as if t he reference to the Model Regulation adopted on June 6, 1979, included a referen ce to the NAIC simplification standards.

`(B) If the Association does not promulgate NAIC simplification sta ndards within the 9-month period specified in paragraph (1), the Secretary shall promulgate, not later than 9 months after the end of such period, revised Feder al model standards to incorporate all the requirements and standards of subsecti ons (o), (p), (q), and (r), and other changes in law made by the Omnibus Budget Reconciliation Act of 1990, and subsection (g)(2)(A) shall be applied in each St ate, effective for policies issued to policyholders on and after the date specif ied in subparagraph (C), as if the reference to the Model Regulation adopted on June 6, 1979, included a reference to the revised Federal model standards.< /ul>
`(C)(i) Subject to clause (ii), the date specified in this paragrap h for a State is the date the State adopts the NAIC simplification standards or the Federal simplification standards or 1 year after the date the Association or the Secretary first adopts such standards, whichever is earlier.

`(ii) In the case of a State which the Secretary identifies, in con sultation with the Association, as--

`(I) requiring State legislation (other than legislation approp riating funds) in order for medicare supplemental policies to meet the NAIC or F ederal simplification standards, but

`(II) having a legislature which is not scheduled to meet in 19 91 in a legislative session in which such legislation may be considered,

the date specified in this subparagraph is the first day of the first calendar quarter beginning after the close of the first legislative session of the State legislature that begins on or after January 1, 1991. For purposes of t he previous sentence, in the case of a State that has a 2-year legislative sessi on, each year of such session shall be deemed to be a separate regular session o f the State legislature.

`(2) By not later than 2 years after the date of enactment of this subsection, the Secretary shall report to the Congress on the adoption of the st andards and requirements of this section, including the identification of those States which do and do not have regulatory programs that meet the requirements o f this section, and the reasons for the failure of any States to adopt some or a ll of the standards and requirements of this section.

`(3) In promulgating simplification standards under subsection (p)( 1), the Association or Secretary shall consult with a working group composed of representatives of issuers of medicare supplemental policies, consumer groups, m edicare beneficiaries, and other qualified individuals. Such representatives sha ll be selected in a manner so as to assure balanced representation among the int erested groups.

`(4)(A) Every 3 years the Secretary shall, in consultation with the NAIC, evaluate the appropriateness of new or innovative benefits offered pursua nt to subsection (p)(5)(B), and determine whether the incorporation of such new or innovative benefits into the simplification standards would further the purpo ses of such standards. If within 90 days after a request from the Secretary, the Association--

`(i) makes a determination that modification of the NAIC or Fed eral simplification standards is appropriate; and

`(ii) modifies the NAIC or Federal simplification standards to include such additional group of benefits (including accompanying language and f ormat with respect to such benefits),

subsection (g)(2)(A) shall be applied in each State, effective for po licies issued to policyholders on or after the date specified in subparagraph (B ), as if the reference to the Model Regulation adopted on June 6, 1979 included a reference to the NAIC or Federal simplification standards as modified. If the Association fails to make a determination with respect to appropriateness of mod ifying the NAIC or Federal simplification standards, then the Secretary may make such determination and may modify the NAIC or Federal simplification standards to include such additional benefits (including accompanying language and format with respect to such benefits) as may be appropriate. In such a case, subsection (g)(2)(A) shall be applied in each State, effective for policies issued to poli cyholders on or after the date specified in subparagraph (B), as if the referenc e to the Model Regulation adopted on June 6, 1979 included a reference to the NA IC or Federal simplification standards as modified.

`(B) The date specified in this subparagraph for a State is the ear lier of the date the State adopts the modifications to the NAIC or Federal simpl ification standards or 1 year after the date the Association or the Secretary fi rst adopts the modifications to such standards, except that, in the case of a St ate that the Secretary identifies, in consultation with the Association, as--

`(i) requiring State legislation (other than appropriating fund s) in order for medicare supplemental policies to meet the modified NAIC or Fede ral simplification standards, but

`(ii) having a legislature which is not scheduled to meet withi n the 1-year period after the date the Association or Secretary first adopts the modifications to such standards,

the date specified in this subparagraph is the first day of the first calendar year after the close of the first legislative session of the State leg islature that begins after the date the Association or the Secretary first adopt s such modifications. For the purposes of the previous sentence, in the case of a State that has a 2-year legislative session, each year of the legislative sess ion shall be deemed to be a separate regular session of the State legislature.

`(5) If benefits under this title are changed and the Secretary det ermines, in consultation with the Association, that changes in the simplificatio n standards are needed to reflect such changes in benefits, the provisions for t he modification of simplification standards outlined in paragraph (4)(A) will be applied.'.

(k) HEALTH INSURANCE INFORMATION, COUNSELING, AND ASSISTANCE GRANTS -

(1) GRANTS- The Secretary of Health and Human Services (hereaft er in this section referred to as the `Secretary') shall make grants to States t hat submit applications to the Secretary that meet the requirements of this subs ection for the purpose of providing information, counseling, and assistance rela ting to the procurement of adequate and appropriate health insurance coverage to individuals who are eligible to receive benefits under title XVIII of the Socia l Security Act (hereafter in this section referred to as `eligible individuals') . The Secretary shall prescribe regulations to establish a minimum level of fund ing for a grant issued under this section.

(2) GRANT APPLICATIONS- (A) In submitting an application under this subsection, a State may consolidate and coordinate an application that cons ists of parts prepared by more than one agency or department of such State.

(B) As part of an application for a grant under this section, a State shall submit a plan for a State-wide health insurance information, counse ling, and assistance program. Such program shall--

(i) establish or improve upon a health insurance informatio n, counseling, and assistance program that provides counseling (including direct counseling) and assistance to eligible individuals in need of health insurance information, including--

(I) information that may assist individuals in obtainin g benefits and filing claims under titles XVIII and XIX of the Social Security A ct;

(II) policy comparison information for medicare supplem ental policies (as described in section 1882(g)(1) of the Social Security Act (4 2 U.S.C. 1395ss(g)(1)) and information that may assist individuals in filing cla ims under such medicare supplemental policies;

(III) information regarding long-term care insurance; a nd

(IV) information regarding other types of health insura nce benefits that the Secretary determines to be appropriate;

(ii) in conjunction with the health insurance information, counseling, and assistance program described in clause (i), establish a system o f referral to appropriate Federal or State departments or agencies for assistanc e with problems related to health insurance coverage (including legal problems), as determined by the Secretary;

(iii) provide for a sufficient number of staff positions (i ncluding volunteer positions) necessary to provide the services of the health in surance information, counseling, and assistance program;

(iv) provide assurances that staff members (including volun teer staff members) of the health insurance information, counseling, and assista nce program have no conflict of interest in providing the services described in clause (i);

(v) provide for the collection and dissemination of timely and accurate health care information to staff members (including volunteer staff members) of the health insurance information, counseling, and assistance progra m and regular staff meetings and continuing education programs for the purpose o f informing the staff of current developments in legal and economic issues relat ing to the provision of health insurance;

(vi) provide for training programs for staff members (inclu ding volunteer staff members);

(vii) provide for the coordination of the exchange of healt h insurance information between the staff of departments and agencies of the Sta te government and the staff of the health insurance information, counseling, and assistance program;

(viii) make recommendations concerning consumer issues and complaints related to the provision of health care to agencies and departments o f the State government and the Federal Government responsible for providing or r egulating health insurance;

(ix) establish an outreach program to provide the health in surance information and counseling described in clause (i) and the assistance de scribed in clause (ii) to eligible individuals; and

(x) demonstrate, to the satisfaction of the Secretary, an a bility to provide the counseling and assistance required under this subsection.

(3) SPECIAL GRANTS- (A) A State that is conducting a health ins urance information, counseling, and assistance program that is substantially sim ilar to a program described in paragraph (2)(B), shall, as a requirement for eli gibility for a grant under this section, demonstrate, to the satisfaction of the Secretary, that such State shall maintain the activities of such program at lea st at the level that such activities were conducted immediately preceding the da te of the issuance of any grant during the period of time covered by such grant under this section and that such activities will continue to be maintained at su ch level.

(B) If the Secretary determines that the existing health insura nce information, counseling, and assistance program is substantially similar to a program described in paragraph (2)(B), the Secretary may waive some or all of the requirements described in paragraph (2)(B), and issue a grant to the State f or the purpose of increasing the number of services offered by the health insura nce information, counseling, and assistance program, experimenting with new meth ods of outreach in conducting such program, or expanding such program to geograp hic areas of the State not previously served by the program.

(4) CRITERIA FOR ISSUING GRANTS- In issuing a grant under this section, the Secretary shall consider--

(A) the commitment of the State to carrying out the health insurance information, counseling, and assistance program described in paragraph (2)(B), including the level of cooperation demonstrated--

(i) by the office of the chief insurance regulator of t he State, or the equivalent State entity;

(ii) other officials of the State responsible for overs eeing insurance plans issued by nonprofit hospital and medical service associati ons; and

(iii) departments and agencies of such State responsibl e for--

(I) administering funds under title XIX of the Soci al Security Act, and

(II) administering funds appropriated under the Old er Americans Act;

(B) the population of eligible individuals in such State as a percentage of the population of such State; and

(C) in order to ensure the needs of rural areas in such Sta te, the relative costs and special problems associated with addressing the speci al problems of providing health care information, counseling, and assistance to the rural areas of such State.

(5) ANNUAL STATE REPORT- A State that receives a grant under pa ragraph (3) or (4) shall, not later than 180 days after receiving such grant, an d annually thereafter, issue an annual report to the Secretary that includes inf ormation concerning--

(A) the number of individuals served by the State-wide heal th insurance information, counseling and assistance program of such State;< /ul>

(B) an estimate of the amount of funds saved by the State, and by eligible individuals in the State, in the implementation of such program; and

(C) the problems that eligible individuals in such State en counter in procuring adequate and appropriate health care coverage.

(6) REPORT TO CONGRESS- Not later than 180 days after the date of the enactment of this section, and annually thereafter, the Secretary shall i ssue a report to the Committee on Finance of the Senate, the Special Committee o n Aging of the Senate, the Committee on Ways and Means of the House of Represent atives, the Committee on Energy and Commerce of the House of Representatives, an d the Select Committee on Aging of the House of Representatives that--

(A) summarizes the allocation of funds authorized for grant s under this section and the expenditure of such funds;

(B) summarizes the scope and content of training conference s convened under subsection (f);

(C) outlines the problems that eligible individuals encount er in procuring adequate and appropriate health care coverage;

(D) makes recommendations that the Secretary determines to be appropriate to address the problems described in subparagraph (C); and

(E) in the case of the report issued 2 years after the date of enactment of this section, evaluates the effectiveness of counseling program s established under this program, and makes recommendations regarding continued authorization of funds for these purposes.

(7) AUTHORIZATION OF APPROPRIATIONS FOR GRANTS- There are autho rized to be appropriated, in equal parts from the Federal Hospital Insurance Tru st Fund and from the Federal Supplementary Medical Insurance Trust Fund, $10,000 ,000 for each of fiscal years 1991, 1992, and 1993, to fund the grant programs d escribed in this subsection.

(l) MEDICARE AND MEDIGAP INFORMATION BY TELEPHONE- (1) Title XVIII (42 U.S.C. 1395 et seq.) is amended by inserting after section 1888 the followin g:

`MEDICARE AND MEDIGAP INFORMATION BY TELEPHONE

`SEC. 1889. The Secretary shall provide information via a toll-free telephone number on the programs under this title and on medicare supplemental policies as defined in section 1882(g)(1) (including the relationship of State p rograms under title XIX to such policies).'.

(2) The Secretary is authorized to conduct demonstration projects i n up to 5 States for the purpose of establishing statewide toll-free telephone n umbers for providing information on medicare benefits, medicare supplemental pol icies available in the State, and benefits under the State medicaid program.

SEC. 6156. TECHNICAL AND MISCELLANEOUS PROVISIONS RELATING TO PARTS A AND B.

(a) EXTENSIONS OF EXPIRING AUTHORITIES-

(1) PROHIBITION OF PAYMENT CYCLE CHANGES- Notwithstanding any o ther provision of law, the Secretary of Health and Human Services is not authori zed to issue, after the date of the enactment of this Act, any final regulation, instruction, or other policy change which is primarily intended to have the eff ect of slowing down or speeding up claims processing, or delaying payment of cla ims, under title XVIII of the Social Security Act.

(2) WAIVER OF LIABILITY FOR HOME HEALTH AGENCIES- Section 9305( g)(3) of the Omnibus Budget Reconciliation Act of 1986 is amended by striking `N ovember 1, 1990' and inserting `December 31, 1995'.

(b) APPLICATION OF HOSPITAL WAGE INDEX TO HOME HEALTH AGENCIES-

(1) IN GENERAL- Section 1861(v)(1)(L)(iii) (42 U.S.C. 1395x(v)( 1)(L)(iii)) is amended to read as follows:

`(iii) In establishing limits under this subparagraph for portions of a cost reporting period occurring during a fiscal year, the Secretary shall u tilize a wage index equal to the area wage index applicable under section 1886(d )(3)(E) during the fiscal year to hospitals located in the geographic area in wh ich the home health agency is located, in updating the wage index for establishi ng such limits the Secretary shall provide that payments to home health agencies will be no greater or lesser than such payments would have been without regard to the update of such wage index.'.

(2) TRANSITION PROVISION- Notwithstanding section 1861(v)(1)(L) (iii) of the Social Security Act, the Secretary of Health and Human Services sha ll, in determining the limits of reasonable costs under title XVIII of such Act with respect to services furnished by a home health agency for portions of a cos t reporting period occurring during a fiscal year, utilize a wage index equal to --

(A) for portions of cost reporting periods beginning on or after July 1, 1991, and on or before June 30, 1992, a combined area wage index c onsisting of--

(i) 67 percent of the area wage index applicable under section 1861(v)(1)(L)(iii) of such Act to such home health agency, determined us ing the survey of the 1982 wages and wage-related costs of hospitals in the Unit ed States conducted under such section, and

(ii) 33 percent of the area wage index applicable under section 1886(d)(3)(E) of such Act to hospitals located in the geographic area i n which the home health agency is located for discharges occurring during the fi scal year, determined using the survey of the 1988 wages and wage-related costs of hospitals in the United States conducted under such section; and

(B) for portions of cost reporting periods beginning on or after July 1, 1992, and on or before June 30, 1993, a combined area wage index c onsisting of--

(i) 33 percent of the area wage index applicable under section 1861(v)(1)(L)(iii) of such Act to such home health agency, determined us ing the survey of the 1982 wages and wage-related costs of hospitals in the Unit ed States conducted under such section, and

(ii) 67 percent of the area wage index applicable under section 1886(d)(3)(E) of such Act to hospitals located in the geographic area i n which the home health agency is located for discharges occurring during the fi scal year, determined using the survey of the 1988 wages and wage-related costs of hospitals in the United States conducted under such section; and

(3) EFFECTIVE DATE- The amendment made by paragraph (1) shall a pply with respect to home health agency cost reporting periods beginning on or a fter July 1, 1993.

(c) RECOGNITION OF COSTS OF HOSPITAL SUPPORTED NURSING AND ALLIED H EALTH EDUCATIONAL PROGRAMS AS ALLOWABLE REASONABLE COSTS-

(1) IN GENERAL- (A) Beginning on or after October 1, 1990, all costs related to clinical training, as defined by the Secretary, on a hospital's premises for a hospital supported education program and which are incurred by a hospital or by an educational institution related to the hospital by common own ership or common control, shall be considered costs incurred for approved educat ional activities for purposes of section 1886(a)(4) of the Social Security Act ( 42 U.S.C. 1395ww(a)(4)). Subject to subparagraph (B), such costs shall be allowa ble to a hospital on a reasonable cost basis and shall be considered to be pass- through costs under title XVIII of such Act. An education program shall be deeme d to be hospital supported if the program is--

(i) an approved nursing or allied health education program;

(ii) is not a hospital operated program; and

(iii) the hospital participates in the program in conjuncti on with an educational institution.

(B) For purposes of subparagraph (A), section 1886(a)(4) of the Social Security Act, and section 1861(v) of such Act, costs relating to a hospi tal supported education program shall be deemed to be reimbursable--

(i) only to the extent that the proportion of costs claimed by a hospital for a hospital supported education program (which proportion shal l be expressed as a ratio, the numerator of which is the dollar amount of suppor t given by the hospital to the school in the specific 12-month period covered by the hospital's cost report and the denominator of which is the total allowable costs for inpatients hospital services irrespective of how such costs are paid u nder this title) are not greater than such proportion of costs claimed by such h ospital (subject to the review described in paragraph (2)), in the cost reportin g period prior to the cost reporting period beginning on or after October 1, 199 0;

(ii) only if the hospital is receiving a benefit for the su pport it furnishes to such program through the provision of clinical services by nursing or allied health students incidental to their training, or the hospital hires graduates from the hospital supported education program; and

(iii) only to the extent that the cost is less than the cos t the hospital would be expected to incur were such a hospital to operate its ow n similar program.

(2) SPECIAL AUDIT RULE- For purposes of paragraph (1)(B)(i), th e Secretary's determination of the initial proportion of costs (that is, those c osts claimed in the cost reporting period prior to the cost reporting period beg inning on or after October 1, 1990) shall be accomplished by a special audit (or other appropriate mechanism), which audit (or mechanism) shall ensure that each hospital has appropriately reported its level of support during such period.

(3) PROHIBITION ON RECOUPMENT OF CERTAIN NURSING AND ALLIED EDU CATIONAL COSTS- (A) The Secretary of Health and Human Services (hereinafter refe rred to as the `Secretary') shall not disallow, recoup from, or otherwise reduce or adjust payments under title XVIII of the Social Security Act to hospitals wi th respect to claims by a hospital on its medicare costs reports for cost report ing periods beginning on or after October 1, 1983, and before October 1, 1990, r elating to hospital supported education programs on the grounds that the costs o f such programs were not allowable costs or were included in the definition of ` operating costs of inpatient services' pursuant to section 1886(a)(4) of such Ac t, so that no pass-through of such costs was permitted under that section.< /ul>

(B) The Secretary shall provide that if any disallowance, recou pment, adjustment, or reduction in payments described in subparagraph (A) has oc curred prior to the date of enactment of this Act, such actions shall be reverse d and any necessary refunds or administrative adjustments shall be promptly made .

(3) CONFORMING AMENDMENT- (A) Section 6205(a) of the Omnibus Bu dget Reconciliation Act of 1989 is amended by striking `(a)' and the subsection heading.

(B) Section 6205(b) of such Act is hereby repealed.

(4) RULE OF CONSTRUCTION- Nothing in this subsection shall be c onstrued as requiring the Secretary of Health and Human Services to modify those existing regulations or instructions which pertain to the determination of reas onable costs for a hospital-operated education program.

(d) CASE MANAGEMENT DEMONSTRATION PROJECTS RESUMED-

(1) IN GENERAL- Notwithstanding any other provision of law, the Secretary of Health and Human Services (in this section referred to as the `Sec retary') shall resume the 3 case management demonstration projects described in paragraph (2) and approved under section 425 of the Medicare Catastrophic Covera ge Act of 1988 (in this subsection referred to as `MCCA').

(2) PROJECT DESCRIPTIONS- The demonstration projects referred t o in paragraph (1) are--

(A) the project proposed to be conducted by Providence Hosp ital for case management of the elderly at risk for acute hospitalization as des cribed in Project No. 18-P-99379/5-01;

(B) the project proposed to be conducted by the Iowa Founda tion for Medical Care to study patients with chronic congestive conditions to re duce repeated hospitalizations of such patients as described in Project No. P-99 399/4-01; and

(C) the project proposed to be conducted by Key Care Health Resources, Inc., to examine the effects of case management on 2,500 high cost m edicare beneficiaries as described in Project No. 18-P-99396/5.

(3) TERMS AND CONDITIONS- The demonstration projects resumed pu rsuant to paragraph (1) shall be subject to the same terms and conditions establ ished under section 425 of MCCA. In determining the 2-year duration period of a project resumed pursuant to paragraph (1), the Secretary may not take into accou nt any period of time for which the project was in effect under section 425 of M CCA.

(e) TREATMENT OF CERTAIN HOSPITALS WITH RESPECT TO PAYMENTS FOR GRA DUATE MEDICAL EDUCATION COSTS- Section 1886(h)(2) (42 U.S.C. 1395ww(h)(2)) is am ended--

(1) by inserting `(i)' after `(E)'; and

(2) by adding at the end of subparagraph (E) the following new clause:

`(ii) In the case of a hospital which did have an approved medical residency training program for a cost reporting period beginning during fiscal y ear 1984, but which made a commitment to substantially expand its program that w as not fully reflected in costs incurred during cost reporting periods beginning in such fiscal year, such hospital may request the use of an alternative cost r eporting period other than that which began during fiscal year 1984 for purposes of determining the average amount recognized as reasonable medical education co sts of the hospital for each full-time equivalent resident. The Secretary shall review each such request and determine whether it would be appropriate to provid e for an FTE resident amount based on an alternative cost reporting period, base d on approved FTE resident amounts for comparable programs. If the Secretary app roves a request under this clause, payments based on alternative cost reporting periods for a hospital described under this clause, shall begin for the first co st reporting period for which the Secretary determines the hospital has substant ially implemented its program expansion.'.

(f) HCFA SERVICE FELLOWS PROGRAM-

(1) IN GENERAL- Section 1117 (42 U.S.C. 1317) is amended--

(A) by inserting `; HCFA SERVICE FELLOWS PROGRAM' at the en d of the heading,

(B) by inserting `(a)' after `SEC. 1117.', and

(C) by adding at the end the following new subsection:

`(b)(1) The Administrator may establish an HCFA Service Fellows Pro gram under which up to 10 individuals from the private sector or academia who ha ve demonstrated exceptional competence or highly specialized skills or knowledge may conduct health-care related research, studies, and investigations within th e Health Care Financing Administration.

`(2) Qualified individuals may be appointed by the Administrator (w ithout regard to rules respecting appointments, classification, and pay rates in the competitive service) to serve as HCFA Service Fellows for a period of not t o exceed 2 years (which may, in individual cases under exceptional circumstances , be extended for up to 2 additional years).

`(3) Individuals appointed as HCFA Service Fellows shall not be inc luded in any determination of the number of full-time equivalent employees of th e Department for the purpose of any limitation on the number of such employees e stablished by any law.

`(4) The Administrator is not authorized to expend more than $750,0 00 annually on the costs of the HCFA Service Fellows Program (including the cost s of salaries under the program)'.

(g) SELF-REFERRAL TECHNICAL- (1) Section 1877(b) (42 U.S.C. 1395nn( b)) is amended by redesignating paragraph (4) as paragraph (5) and inserting aft er paragraph (3) the following:

`(4) SERVICES UNRELATED TO INVESTMENT INTEREST OR COMPENSATION ARRA NGEMENT- In the case of clinical laboratory services furnished by a hospital pur suant to a referral by a physician who has a financial relationship with the hos pital that does not involve the provision of such services.'.

(2) The amendment made by paragraph (1) shall be effective as if in cluded in the enactment of the Omnibus Budget Reconciliation Act of 1989.
SEC. 6157. LIVING WILLS AND OTHER ADVANCE DIRECTIVES.

(a) MEDICARE PROVIDER AGREEMENTS-

(1) IN GENERAL- Section 1866 (42 U.S.C. 1395cc(a)(1)) is amende d--

(A) in subsection (a)(1)--

(i) by striking `and' at the end of subparagraph (O),

(ii) by striking the period at the end of subparagraph (P) and inserting `, and', and

(iii) by inserting after subparagraph (P) the following new subparagraph:

`(Q) in the case of hospitals, skilled nursing facilities, home health agencies, and hospice programs, to comply with the requirement of subsec tion (f) (relating to maintaining written policies and procedures respecting adv ance directives).'; and

(B) by inserting after subsection (e) the following new sub section:

`(f)(1) For purposes of subsection (a)(1)(Q) and sections 1819(c)(1 )(E), 1833(r), 1876(c)(8), and 1891(a)(6), the requirement of this subsection is that a provider of services or prepaid or eligible organization (as the case ma y be) maintain written policies and procedures with respect to all adult individ uals receiving medical care by or through the provider or organization--
`(A) to provide written information to each such individual con cerning--

`(i) an individual's rights under State law (whether statut ory or as recognized by the courts of the State) to make decisions concerning su ch medical care, including the right to accept or refuse medical or surgical tre atment and the right to formulate advance directives (as defined in paragraph (3 )), and

`(ii) the policies of the provider or organization respecti ng the implementation of such rights;

`(B) to inquire of an individual (or a family member) whether t he individual has executed an advance directive and document in the individual's medical record the response to the inquiry;

`(C) not to condition the provision of care or otherwise discri minate against an individual based on whether or not the individual has executed an advance directive;

`(D) to ensure compliance with requirements of State law respec ting advance directives at facilities of the provider or organization; and< /ul>

`(E) to provide (individually or with others) for education for staff on issues concerning advance directives.

Subparagraph (C) shall not be construed as requiring the provision of care which conflicts with an advance directive.

`(2) In this subsection, the term `advance directive' means a writt en instruction, such as a living will or durable power of attorney for health ca re, recognized under State law and relating to the provision of such care when t he individual is incapacitated.'.

(2) APPLICATION TO PREPAID ORGANIZATIONS-

(A) ELIGIBLE ORGANIZATIONS- Section 1876(c) (42 U.S.C. 1395 mm(c)) is amended by adding at the end the following new paragraph:

`(8) A contract under this section shall provide that the eligible organization shall meet the requirement of section 1866(f) (relating to maintain ing written policies and procedures respecting advance directives).'.

(B) OTHER PREPAID ORGANIZATIONS- Section 1833 (42 U.S.C. 13 95l) is amended by adding at the end the following new subsection:

`(r) The Secretary may not provide for payment under subsection (a) (1)(A) with respect to an organization unless the organization provides assuranc es satisfactory to the Secretary that the organization meets the requirement of section 1866(f) (relating to maintaining written policies and procedures respect ing advance directives).'.

(3) CONFORMING AMENDMENTS-

(A) Section 1819(c)(1) (42 U.S.C. 1395i-3(c)(1)) is amended by adding at the end the following new subparagraph:

`(E) INFORMATION RESPECTING ADVANCE DIRECTIVES- A skilled n ursing facility must comply with the requirement of section 1866(f) (relating to maintaining written policies and procedures respecting advance directives).'.

(B) Section 1891(a) (42 U.S.C. 1395bbb(a)) is amended by ad ding at the end the following:

`(6) The agency complies with the requirement of section 1866(f ) (relating to maintaining written policies and procedures respecting advance di rectives).'.

(4) EFFECTIVE DATES-

(A) The amendments made by paragraphs (1) and (3) shall app ly with respect to services furnished on or after the first day of the first mon th beginning more than 1 year after the date of the enactment of this Act.< /ul>

(B) The amendments made by paragraph (2) shall apply to con tracts under section 1876 of the Social Security Act and payments under section 1833(a)(1)(A) of such Act as of the first day of the first month beginning more than 1 year after the date of the enactment of this Act.

(b) MEDICAID STATE PLAN REQUIREMENTS-

(1) IN GENERAL- Section 1902 (42 U.S.C. 1396a(a)) is amended--

(A) in subsection (a)--

(i) by striking `and' at the end of paragraph (52),

(ii) by striking the period at the end of paragraph (53 ), and

(iii) by inserting after paragraph (53) the following n ew paragraphs:

`(54) provide that each hospital, nursing facility, provider of home health care or personal care services, hospice program, or health maintena nce organization (as defined in section 1903(m)(1)(A)) receiving funds under the plan shall comply with the requirement of subsection (s); and

`(55) provide that the State, acting through a State agency, as sociation, or other private entity, develop a written description of the law of the State (whether statutory or common law) concerning advance directives that w ould be distributed by providers under the requirements of subsections.'; and

(B) by adding at the end the following new subsection:

`(s)(1) For purposes of subsection (a)(54) and sections 1903(m)(1)( A) and 1919(c)(2)(E), the requirement of this subsection is that a provider or o rganization (as the case may be) maintain written policies and procedures with r espect to all adult individuals receiving medical care by or through the provide r or organization--

`(A) to provide information to each such individual concerning- -

`(i) an individual's rights under State law (whether statut ory or as recognized by the courts of the State) to make decisions concerning su ch medical care, including the right to accept or refuse medical or surgical tre atment and the right to formulate advance directives (as defined in paragraph (3 )), and

`(ii) the hospital's written policies respecting the implem entation of such rights;

`(B) to document in the individual's medical record whether or not the individual has executed an advance directive;

`(C) not to condition the provision of care or otherwise discri minate against an individual based on whether or not the individual has executed an advance directive;

`(D) to ensure compliance with requirements of State law respec ting advance directives; and

`(E) to provide (individually or with others) for education for staff and the community on issues concerning advance directives.

Subparagraph (C) shall not be construed as requiring the provision of care which conflicts with an advance directive.

`(2) In this subsection, the term `advance directive' means a writt en instruction, such as a living will or durable power of attorney for health ca re, recognized under State law and relating to the provision of such care when t he individual is incapacitated.'.

(2) CONFORMING AMENDMENTS-

(A) Section 1903(m)(1)(A) (42 U.S.C. 1396b(m)(1)(A)) is ame nded--

(i) by inserting `meets the requirement of section 1902 (s)' after `which' the first place it appears, and

(ii) by inserting `meets the requirement of section 190 2(a) and' after `which' the second place it appears.

(B) Section 1919(c)(2) of such Act (42 U.S.C. 1396r(c)(2)) is amended by adding at the end the following new subparagraph:

`(E) INFORMATION RESPECTING ADVANCE DIRECTIVES- A nursing f acility must comply with the requirement of section 1902(s) (relating to maintai ning written policies and procedures respecting advance directives).'.

(3) EFFECTIVE DATE- The amendments made by this subsection shal l apply with respect to services furnished on or after the first day of the firs t month beginning more than 1 year after the date of the enactment of this Act.

(c) STUDY-

(1) IN GENERAL- The Secretary of Health and Human Services (her eafter in this section referred to as the `Secretary') shall conduct a study or enter into an agreement with a private entity to conduct a study and submit a re port to Congress with respect to the implementation of directed health care deci sions. Such study shall--

(A) evaluate the experience of practitioners, providers, an d government regulators in complying with the provisions of this section;

(B) assess the awareness and utilization of advance directi ves as a result of this section;

(C) investigate methods of encouraging reciprocity among St ates in the enforcement of advance directives;

(D) report on the manner in which treatment decisions are m ade in the absence of an advance directive; and

(E) make such recommendations for legislation as may be app ropriate to carry out the purposes of this Act.

(2) EFFECTIVE DATE- The study and report provided for in this s ubsection shall be submitted to Congress no later than the date which is 4 years after the date of enactment of this section.

(d) PUBLIC EDUCATION CAMPAIGN-

(1) IN GENERAL- The Secretary, no later than 6 months after the date of enactment of this section, shall develop and implement a national campa ign to inform the public of the option to execute advance directives and of a pa tient's right to participate and direct health care decisions.

(2) DEVELOPMENT AND DISTRIBUTION OF INFORMATION- The Secretary shall develop or approve nationwide informational materials that would be distri buted by providers under the requirements of this section, to inform the public and the medical and legal profession of each person's right to make decisions co ncerning medical care, including the right to accept or refuse medical or surgic al treatment, and the existence of advance directives.

(3) PROVIDING ASSISTANCE TO STATES- The Secretary shall assist appropriate State agencies, associations, or other private entities in developin g the State-specific documents that would be distributed by providers under the requirements of this section. The Secretary shall further assist appropriate Sta te agencies, associations, or other private entities in ensuring that providers are provided a copy of the documents that are to be distributed under the requir ements of the section.

(4) DUTIES OF SECRETARY- The Secretary shall mail information t o Social Security recipients, add a page to the medicare handbook with respect t o the provisions of this section, and provide for and install a nationwide, toll -free informational number to provide State agencies, private entities, and medi care and medicaid eligible individuals with information regarding the option to execute advance directives and the rights of individuals under the provisions of this section.

PART 4--PROVISIONS RELATING TO PREMIUMS, DEDUCTIBLES, AND COINSUR ANCE

SEC. 6161. PART B PREMIUM.

Section 1839(e) is amended by inserting `and for each month after D ecember 1992 and before January 1996' after `January 1991' each time it appears.

SEC. 6162. CHANGE IN PART B DEDUCTIBLE.

Section 1833(b) (42 U.S.C. 1395l) is amended by inserting after `$7 5' the following: `for calendar years before 1991 and after 1995, and $150 for y ears after 1990 and before 1996'.

SEC. 6163. 20 PERCENT COINSURANCE FOR CLINICAL DIAGNOSTIC LABORATORY TESTS.

(a) IN GENERAL- Section 1833 of the Social Security Act (42 U.S.C. 1395l) is amended--

(1) in subsection (a)(1)(D)(i)), by striking `in the case of' a nd all that follows through `basis, or',

(2) in subsection (a)(2)(D)(i), by striking `in the case of' an d all that follows through `1866, or', and

(3) in subsection (b)(3), by striking `(A) under subsection (a) (1)(D)' and all that follows through `(B)'.

(b) EFFECTIVE DATE- The amendments made by subsection (a) shall app ly to clinical diagnostic laboratory tests performed on or after January 1, 1991 .

Subtitle C--Medicaid

PART I--PRESCRIPTION DRUG DISCOUNTS

SEC. 6201. REIMBURSEMENT FOR PRESCRIBED DRUGS UNDER MEDICAID.
(a) IN GENERAL-

(1) DENIAL OF FEDERAL FINANCIAL PARTICIPATION UNLESS REBATE AGR EEMENTS AND DRUG USE REVIEW IN EFFECT- Section 1903(i) (42 U.S.C. 1396b(i)) is a mended--

(A) by striking the period at the end of paragraph (9) and inserting `; or', and

(B) by inserting after paragraph (9) the following new para graph:

`(10) with respect to covered outpatient drugs of a manufacture r dispensed in any State unless, (A) except as provided in section 1927(a)(3), t he manufacturer complies with the rebate requirements of section 1927(a) with re spect to the drugs so dispensed in all States, and (B) effective January 1, 1993 , the State provides for drug use review in accordance with section 1927(g).'.

(2) PROHIBITING STATE PLAN DRUG ACCESS LIMITATIONS FOR DRUGS CO VERED UNDER A REBATE AGREEMENT- Section 1902(a) of such Act (42 U.S.C. 1396a(a)) is amended--

(A) by striking `and' at the end of paragraph (52),

(B) by striking the period at the end of paragraph (53) and inserting `; and', and

(C) by inserting after paragraph (53) the following new par agraph:

`(54)(A) provide that, any formulary or similar restriction (ex cept as provided in section 1927(d)) on the coverage of covered outpatient drugs under the plan shall permit the coverage of covered outpatient drugs of any ma nufacturer which has entered into and complies with an agreement under section 1 927(a), which are prescribed for a medically accepted indication (as defined in subsection 1927(k)(6)), and

`(B) comply with the reporting requirements of section 1927(b)( 2)(A) and the requirements of subsections (d) and (g) of section 1927.'.

(3) REBATE AGREEMENTS FOR COVERED OUTPATIENT DRUGS, DRUG USE RE VIEW, AND RELATED PROVISIONS- Title XIX of the Social Security Act is amended by redesignating section 1927 as section 1928 and by inserting after section 1926 the following new section:

`PAYMENT FOR PRESCRIBED DRUGS

`SEC. 1927. (a) REQUIREMENT FOR REBATE AGREEMENT-

`(1) IN GENERAL- In order for payment to be available under sec tion 1903(a) for covered outpatient drugs of a manufacturer, the manufacturer mu st have entered into and have in effect a rebate agreement described in subsecti on (b) with the Secretary, on behalf of States (except that, the Secretary may a uthorize a State to enter directly into agreements with manufacturer). If a manu facturer has not entered into such an agreement before January 1, 1991, such an agreement, subsequently entered into, shall not be effective until the first day of the calendar quarter that begins more than 60 days after the date the agreem ent is entered into.

`(2) EFFECTIVE DATE- Paragraph (1) shall first apply to drugs d ispensed under this title on or after January 1, 1991.

`(3) AUTHORIZING PAYMENT FOR DRUGS NOT COVERED UNDER REBATE AGR EEMENTS- Paragraph (1), and section 1903(i)(10)(A), shall not apply to the dispe nsing of a single source drug or innovator multiple source drug if (A) the State has made a determination that the availability of the drug is essential to the health of beneficiaries under the State plan for medical assistance; and (B)(i) the physician has obtained approval for use of the drug in advance of its dispen sing in accordance with a prior authorization program described in subsection (d ), or (ii) the Secretary has reviewed and approved the State's determination und er subparagraph (A).

`(4) EFFECT ON EXISTING AGREEMENTS- In the case of a rebate agr eement in effect between a State and a manufacturer on the date of the enactment of this section, such agreement, for the initial agreement period specified the rein, shall be considered to be a rebate agreement in compliance with this secti on with respect to that State, if the State agrees to report to the Secretary an y rebates paid pursuant to the agreement. If the State establishes to the satisf action of the Secretary that the agreement provides for rebates that are at leas t as large as the rebates otherwise required under this section, and the State a grees to report any rebates under the agreement to the Secretary, the agreement shall be considered to be a rebate agreement in compliance with the section for the renewal periods of such agreement.

`(b) TERMS OF REBATE AGREEMENT-

`(1) PERIODIC REBATES-

`(A) IN GENERAL- A rebate agreement under this subsection s hall require the manufacturer to provide, to each State plan approved under this title, a rebate each calendar quarter (or periodically in accordance with a sch edule specified by the Secretary) in an amount specified in subsection (c) for c overed outpatient drugs of the manufacturer dispensed under the plan during the quarter (or such other period as the Secretary may specify). Such rebate shall b e paid by the manufacturer not later than 30 days after the date of receipt of t he information described in paragraph (2) for the period involved.

`(B) OFFSET AGAINST MEDICAL ASSISTANCE- Amounts received by a State under this section (or under an agreement authorized by the Secretary u nder subsection (a)(1) or an agreement described in subsection (a)(4)) in any qu arter shall be considered to be a reduction in the amount expended under the Sta te plan in the quarter for medical assistance for purposes of section 1903(a)(1) .

`(2) STATE PROVISION OF INFORMATION-

`(A) STATE RESPONSIBILITY- Each State agency under this tit le shall report to each manufacturer not later than 60 days after the end of eac h calendar quarter and in a form consistent with a standard reporting format est ablished by the Secretary, information on the total number of dosage units of ea ch covered outpatient drug dispensed under the plan during the quarter, and shal l promptly transmit a copy of such report to the Secretary.

`(B) AUDITS- A manufacturer may audit the information provi ded (or required to be provided) under subparagraph (A). Adjustments to rebates shall be made to the extent that information indicates that utilization was grea ter or less than the amount previously specified.

`(C) NOTICE TO SECRETARY- Each State agency shall notify th e Secretary within 30 days after the date each rebate is received under this sec tion.

`(3) MANUFACTURER PROVISION OF PRICE INFORMATION-

`(A) IN GENERAL- Each manufacturer with an agreement in eff ect under this section shall report to the Secretary--

`(i) not later than 30 days after the last day of each quarter (beginning on or after January 1, 1991), on the average manufacturer pri ce (as defined in subsection (k)(1)) and, effective for quarters beginning on or after January 1, 1994 (for single source drugs and innovator multiple source dr ugs), the manufacturer's best price (as defined in subsection (c)(2)(B)) for cov ered outpatient drugs for the quarter, and

`(ii) not later than 30 days after the date of entering into an agreement under this section on the average manufacturer price (as defi ned in subsection (k)(1)) as of October 1, 1990 for each of the manufacturer's c overed outpatient drugs.

`(B) VERIFICATION SURVEYS OF AVERAGE MANUFACTURER PRICE- Th e Secretary may survey wholesalers and manufacturers that directly distribute th eir covered outpatient drugs, when necessary, to verify average manufacturer pri ces reported under subparagraph (A). The Secretary may impose a civil monetary p enalty in an amount not to exceed $10,000 on a wholesaler, manufacturer, or dire ct seller, if the wholesaler, manufacturer, or direct seller of a covered outpat ient drug refuses a request for information about charges or prices by the Secre tary in connection with a survey under this subparagraph or knowingly provides f alse information. The provisions of section 1128A (other than subsections (a) an d (b)) shall apply to a civil money penalty under this subparagraph in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a ).

`(C) PENALTIES-

`(i) FAILURE TO PROVIDE TIMELY INFORMATION- In the case of a manufacturer with an agreement under this section that fails to provide in formation required under subparagraph (A) on a timely basis, the amount of the r ebate required under the agreement shall be increased by $10,000 for each day in which such information has not been provided, and, if such information is not r eported within 90 days of the deadline imposed, the agreement shall be suspended for services furnished after the end of such 90-day period and until the date s uch information is reported (but in no case shall such suspension be for a perio d of less than 30 days).

`(ii) FALSE INFORMATION- Any manufacturer with an agree ment under this section that knowingly provides false information is subject to a civil money penalty in an amount not to exceed $100,000 for each item of false information. Such civil money penalties are in addition to other penalties as m ay be prescribed by law. The provisions of section 1128A (other than subsections (a) and (b)) shall apply to a civil money penalty under this subparagraph in th e same manner as such provisions apply to a penalty or proceeding under section 1128A(a).

`(D) CONFIDENTIALITY OF INFORMATION- Notwithstanding any ot her provision of law, information disclosed by manufacturers or wholesalers unde r this paragraph is confidential and shall not be disclosed by the Secretary or a State agency (or contractor therewith) in a form which discloses the identity of a specific manufacturer or wholesaler, except as the Secretary determines to be necessary to carry out this section and to permit the Comptroller General to review the information provided.

`(4) LENGTH OF AGREEMENT-

`(A) IN GENERAL- A rebate agreement shall be effective for an initial period of no less than 1 year and shall be automatically renewed for a period of no less than one year unless terminated under subparagraph (B).

`(B) TERMINATION-

`(i) BY THE SECRETARY- The Secretary may provide for te rmination of a rebate agreement for violation of the requirements of the agreeme nt or other good cause shown. Such termination shall not be effective earlier th an 60 days after the date of notice of such termination. The Secretary shall pro vide, upon request, a manufacturer with a hearing concerning such a termination, but such hearing shall not delay the effective date of the termination.

`(ii) BY A MANUFACTURER- A manufacturer may terminate a rebate agreement under this section for any reason. Any such termination shall not be effective until such period after the date of the notice as the Secretary may provide (but not beyond the term of the agreement).

`(iii) EFFECTIVENESS OF TERMINATION- Any termination un der this subparagraph shall not affect rebates due under the agreement before th e effective date of its termination.

`(C) DELAY BEFORE REENTRY- In the case of any rebate agreem ent with a manufacturer under this section which is terminated, another such agr eement with the manufacturer (or a successor manufacturer) may not be entered in to until a period of 1 calendar quarter has elapsed since the date of the termin ation, unless the Secretary finds good cause for an earlier reinstatement of suc h an agreement.

`(c) Amount of Rebate-

`(1) BASIC REBATE FOR SINGLE SOURCE DRUGS AND INNOVATOR MULTIPL E SOURCE DRUGS- Except as otherwise provided in this subsection, the amount of t he rebate to a State for a calendar quarter (or other period specified by the Se cretary) with respect to single source drugs and innovator multiple source drugs shall be equal to the product of--

`(A)(i) for quarters (or periods) beginning after December 31, 1990, and before January 1, 1994, 15 percent of the average manufacturer pri ce for each dosage form and strength of such drugs (after deducting customary pr ompt payment discounts) for the quarter (or other period), and

`(ii) for quarters (or other periods) beginning after Decem ber 31, 1993, the greater of--

`(I) the difference between the average manufacturer pr ice for a drug and 85 percent of such price, or

`(II) the difference between the average manufacturer p rice for a drug and the best price (as defined in paragraph (2)(B)) for such qua rter (or period) for such drug, and

`(B) the number of units of such form and dosage dispensed un der the plan under this title in the quarter (or other period) reported by the S tate under subsection (b)(2).

`(2) ADDITIONAL REBATE FOR SINGLE SOURCE AND INNOVATOR MULTIPLE SOURCE DRUGS- (A) The Secretary shall establish a method of adjusting the basic rebate specified under paragraph (1) for single source and innovator multiple s ource drugs of a manufacturer to ensure that a manufacturer's prices for such dr ugs to a State plan approved under this title, determined on an aggregate weight ed average basis, using the average manufacturer price for each such drug, do no t increase by a percentage that is greater than the increase in the Consumer Pri ce Index for all urban consumers (U.S. average) from October 1, 1990 to the mont h before the beginning of the calendar quarter (or other period) involved.< /ul>

`(B) In this subsection, the term `best price' means, with resp ect to a single source drug or innovator multiple source drug of a manufacturer, the lowest price available from the manufacturer to any wholesaler, retailer, n onprofit entity, or governmental entity within the United States (excluding depo t prices of any agency of the Federal Government). The best price shall be inclu sive of cash discounts, free goods, volume discounts, and rebates (other than re bates under this section) and shall be determined without regard to special pack aging, labeling, or identifiers on the dosage form or product or package, and sh all not take into account prices that are merely nominal in amount.

`(3) REBATE FOR OTHER DRUGS- The amount of the rebate to a Stat e for a calendar quarter (or other period specified by the Secretary) with respe ct to covered outpatient drugs (other than single source drugs and innovator mul tiple source drugs) shall be equal to the product of--

`(A) 12 percent of the average manufacturer price for each dosage form and strength of such drugs (after deducting customary prompt payment discounts) for the quarter (or other period), and

`(B) the number of units of such form and dosage dispensed under the plan under this title in the quarter (or other period) reported by the State under subsection (b)(2).

`(d) LIMITATIONS ON COVERAGE OF DRUGS-

`(1) PERMISSABLE RESTRICTIONS- (A) Except as provided in paragr aph (6), but subject to paragraph (5), a State may subject to prior authorizatio n any covered outpatient drug.

`(B) A State may exclude or otherwise restrict coverage of a co vered patient drug if--

`(i) the prescribed use is not for a medically accepted ind ication (as defined in (k)(6));

`(ii) the drug is contained in the list referred to in para graph (2); or

`(iii) the drug is subject to such restrictions pursuant to an agreement between a manufacturer and a State authorized by the Secretary und er subsection (a)(1) or in effect pursuant to subsection (a)(4).
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`(2) LIST OF DRUGS SUBJECT TO RESTRICTION- The following drugs or classes of drugs, or their medical uses, may be excluded from coverage or oth erwise restricted:

`(A) Agents when used for anorexia or weight gain that are not approved for such use by the FDA.

`(B) Agents when used to promote fertility.
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`(C) Agents when used for cosmetic purposes or hair growth.

`(D) Agents when used for the symptomatic relief of cough a nd colds.

`(E) Agents when used to promote smoking cessation.

`(F) Prescription vitamins and mineral products, except pre natal vitamins and fluoride preparations.

`(G) Nonprescription drugs.

`(H) Covered outpatient drugs which the manufacturer seeks to require as a condition of sale that associated tests or monitoring services b e purchased exclusively from the manufacturer or its designee.

`(I) Drugs described in section 107(c)(3) of the Drug Amend ments of 1962 and identical, similar, or related drugs (within the meaning of se ction 310.6(b)(1) of title 21 of the Code of Federal Regulations (`DESI' drugs)) .

`(J) Barbiturates.

`(3) UPDATE OF DRUG LISTINGS- The Secretary shall (except with respect to new drugs approved by the FDA for the first 12 months following the d ate of approval of such drugs shall not be subject to being listed in paragraph (2) under the provisions of this paragraph), by regulation, periodically update the list of drugs described in paragraph (2) or classes of drugs, or their medic al uses, which the Secretary, in consultation with the Commissioner of the Food and Drug Administration, has determined to be of marginal clinical value to bene ficiaries, or, based on data collected by a State's medical assistance program's surveillance and utilization review program, to be subject to clinical abuse or inappropriate use.

`(4) INNOVATOR MULTIPLE-SOURCE DRUGS- Innovator multiple-source drugs shall be treated as under otherwise applicable law and regulation.

`(5) PRIOR AUTHORIZATION PROGRAMS- A State plan under this titl e may not require, as a condition of coverage or payment for a covered outpatien t drug for which Federal financial participation is available in accordance with this section, the approval of the drug before its dispensing for any medically accepted indication (as defined in subsection (k)(6)) unless the system providin g for such approval--

`(A) is available to physicians at least 10 hours each week day, and provides for appropriate accommodations for obtaining prior authorizati on during other times;

`(B) provides response by telephone or other telecommunicat ion device within 24 hours of a request for prior authorization; and

`(C) except with respect to the drugs on the list referred to in paragraph (2), provides for the dispensing of at least a 72-hour supply of a covered outpatient prescription drug in an emergency situation (as defined by the Secretary).

`(6) TREATMENT OF NEW DRUGS- A State may not exclude for covera ge, subject to prior authorization, or otherwise restrict any new biological or drug approved by the Food and Drug Administration after the date of enactment of this section, for a period of 1 year after such approval.

`(7) OTHER PERMISSIBLE RESTRICTIONS- A State may impose limitat ions, with respect to all such drugs in a therapeutic class, on the minimum or m aximum quantities per prescription or on the number of refills, provided such li mitations are necessary to discourage waste.

Nothing in this section shall restrict the ability of a State to addr ess individual instances of fraud or abuse in any manner authorized under the So cial Security Act.

`(8) DELAYED EFFECTIVE DATE- The provisions of paragraph (5) sh all become effective with respect to drugs dispensed under this title on or afte r July 1, 1991.

`(e) DENIAL OF FEDERAL FINANCIAL PARTICIPATION IN CERTAIN CASES- Th e Secretary shall provide that no payment shall be made to a State under section 1903(a) for an innovator multiple-source drug dispensed on or after July 1, 199 1, if, under applicable State law, a less expensive noninnovator multiple source drug (other than the innovator multiple-source drug) could have been dispensed consistent with such law.

`(f) PHARMACY REIMBURSEMENT-

`(1) PAYMENT TO PHARMACISTS-

`(A) IN GENERAL- Beginning fiscal year 1991 and ending Sept ember 30, 1993, each State plan under this title shall provide, after the end of each fiscal year and a lump-sum payment, for a payment to pharmacies dispensing covered outpatient drugs under this title during the fiscal year.

`(B) AMOUNT OF PAYMENT- The amount of the payment under thi s subsection for any fiscal year to a pharmacist shall bear the same ratio to 5 percent of the total amount of rebates received under this section by the State in the fiscal year involved, as the ratio of the number of prescriptions filled by the pharmacy under this title in the fiscal year bears to the total of such n umber for all pharmacies in the State in the fiscal year, and will be made withi n 60 days after the end of each fiscal year.

`(2) NO REDUCTIONS IN REIMBURSEMENT LIMITS- Prior to April 1, 1 993, no changes may be made by the Secretary or a State to the formula used to d etermine the reimbursement limits in effect under this title as of August 1, 199 0, which would result in a reduction in the limit relative to either the ingredi ent cost portion or the dispensing fee portion of the formula, for covered outpa tient drugs.

`(3) ESTABLISHMENT OF UPPER PAYMENT LIMITS- HCFA shall establis h Federal upper limits for all multiple source drugs for which the FDA has rated three or more therapeutically and pharmaceutically equivalent, regardless of wh ether all such additional formulations are rated as such.

`(g) DRUG USE REVIEW-

`(1) IN GENERAL-

`(A) In order to meet the requirement of section 1903(i)(10 )(B), a State shall provide, by not later than January 1, 1993, for a drug use r eview program described in paragraph (2) for covered outpatient drugs in order t o assure that prescriptions (i) are appropriate, (ii) are medically necessary, a nd (iii) are not likely to result in adverse medical results. The program shall be designed to educate physicians and pharmacists to identify and reduce the fre quency of patterns of fraud, abuse, gross overuse, or inappropriate or medically unnecessary care, among physicians, pharmacists, and patients, or associated wi th specific drugs or groups of drugs, as well as potential and actual severe adv erse reactions to drugs including education on therapeutic appropriateness, over utilization and underutilization, appropriate use of generic products, therapeut ic duplication, drug-disease contraindications, drug-drug interactions, incorrec t drug dosage or duration of drug treatment, drug-allergy interactions, and clin ical abuse/misuse.

`(B) The program shall assess data on drug use against pred etermined standards, consistent with the following:

`(i) compendia which shall consist of the following:

`(I) American Hospital Formulary Service Drug Infor mation;

`(II) United States Pharmacopeia-Drug Information; and

`(III) American Medical Association Drug Evaluation s; and

`(ii) the peer-reviewed medical literature.

`(C) The Secretary, under the procedures established in sec tion 1903, shall pay to each State an amount equal to 75 per centum of so much o f the sums expended by the State plan during calendar years 1991 through 1993 as the Secretary determines is attributable to the statewide adoption of a drug us e review program which conforms to the requirements of this subsection.

`(D) States shall not be required to perform additional dru g use reviews with respect to drugs dispensed to residents of nursing facilities which are in compliance with the drug regimen review procedures prescribed by t he Secretary for such facilities in regulations implementing section 1919, curre ntly at section 483.60 of title 42, Code of Federal Regulations.
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`(2) DESCRIPTION OF PROGRAM- Each drug use review program shall meet the following requirements for covered outpatient drugs:

`(A) PROSPECTIVE DRUG REVIEW- (i) The State plan shall prov ide for a review of drug therapy before each prescription is filled or delivered to an individual receiving benefits under this title, typically at the point-of -sale or point of distribution. The review shall include screening for potential drug therapy problems due to therapeutic duplication, drug-disease contraindica tions, drug-drug interactions (including interactions with nonprescription or ov er-the-counter drugs), incorrect drug dosage or duration of drug treatment, drug -allergy interactions, and clinical abuse/misuse. Each State shall use the compe ndia and literature referred to in paragraph (1)(B) as its source of standards f or such review.

`(ii) As part of the State's prospective drug use revie w program under this subparagraph applicable State law shall establish standards for counseling of individuals receiving benefits under this title by pharmacist s which includes at least the following:

`(I) A reasonable effort must be made by the pharma cist to counsel such individual or caregiver of such individual face-to-face whe never possible, and otherwise to do so by telephone.

`(II) The pharmacist must offer to discuss with eac h individual receiving benefits under this title or caregiver of such individual (in person, whenever practicable, or through access to a telephone service whic h is toll-free for long-distance calls) who presents a prescription, matters whi ch in the exercise of the pharmacist's professional judgment (consistent with St ate law respecting the provision of such information), the pharmacist deems sign ificant including the following:

`(aa) The name and description of the medication.
`(bb) The route, dosage form, dosage, route of administration, and duration of drug therapy.
`(cc) Special directions and precautions for preparation, admin istration and use by the patient.
`(dd) Common severe side or adverse effects or interactions and therapeutic contraindications that may be encountered, including their avoidanc e, and the action required if they occur.
`(ee) Techniques for self-monitoring drug therapy.
`(ff) Proper storage.
`(gg) Prescription refill information.
`(hh) Action to be taken in the event of a missed dose.
`(III) A reasonable effort must be made by the phar macist to obtain, record, and maintain at least the following information regard ing individuals receiving benefits under this title:

`(aa) Name, address, telephone number, date of birth (or age) a nd gender.
`(bb) Individual history where significant, including disease s tate or states, known allergies and drug reactions, and a comprehensive list of medications and relevant devices.
`(cc) Pharmacist comments relevant to the individuals drug ther apy.
Nothing in this clause shall be construed as requiring a phar macist to provide consultation when a individual receiving benefits under this t itle or caregiver of such individual refuses such consultation.

`(B) RETROSPECTIVE DRUG USE REVIEW- The program shall provi de, through its mechanized drug claims processing and information retrieval syst ems (approved by the Secretary under section 1903(r)) or otherwise, for the ongo ing periodic examination of claims data and other records in order to identify p atterns of fraud, abuse, gross overuse, or inappropriate or medically unnecessar y care, among physicians, pharmacists and individuals receiving benefits under t his title, or associated with specific drugs or groups of drugs.
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`(C) APPLICATION OF STANDARDS- The program shall, on an ong oing basis, assess data on drug use against explicit predetermined standards (us ing the compendia and literature referred to in subsection (1)(B) as the source of standards for such assessment) including but not limited to monitoring for th erapeutic appropriateness, overutilization and underutilization, appropriate use of generic products, therapeutic duplication, drug-disease contraindications, d rug-drug interactions, incorrect drug dosage or duration of drug treatment, and clinical abuse/misuse and, as necessary, introduce remedial strategies, in order to improve the quality of care and to conserve program funds or personal expend itures.

`(D) EDUCATIONAL PROGRAM- The program shall, through its St ate drug use review board established under paragraph (3), either directly or th rough contracts with accredited health care educational institutions, State medi cal societies or State pharmacists associations/societies or other organizations as specified by the State, and using data provided by the State drug use review board on common drug therapy problems, provide for active and ongoing education al outreach programs (including the activities described in paragraph (3)(C)(iii ) of this subsection) to educate practitioners on common drug therapy problems w ith the aim of improving prescribing or dispensing practices.

`(3) STATE DRUG USE REVIEW BOARD-

`(A) ESTABLISHMENT- Each State shall provide for the establ ishment of a drug use review board (hereinafter referred to as the `DUR Board') either directly or through a contract with a private organization.

`(B) MEMBERSHIP- The membership of the DUR Board shall incl ude health care professionals who have recognized knowledge and expertise in one or more of the following:

`(i) The clinically appropriate prescribing of covered outpatient drugs.

`(ii) The clinically appropriate dispensing and monitor ing of covered outpatient drugs.

`(iii) Drug use review, evaluation, and intervention.

`(iv) Medical quality assurance.

The membership of the DUR Board shall be made up at least 1/ 3 but no more than 51 percent practicing physicians and at least 1/3 practici ng pharmacists.

`(C) ACTIVITIES- The activities of the DUR Board shall incl ude but not be limited to the following:

`(i) Retrospective DUR as defined in section (2)(B).

`(ii) Application of standards as defined in section (2 )(C).

`(iii) Ongoing interventions for physicians and pharmac ists, targeted toward therapy problems or individuals identified in the course o f retrospective drug use reviews performed under this subsection. Intervention p rograms shall include, in appropriate instances, at least:

`(I) information dissemination sufficient to ensure the ready availability to physicians and pharmacists in the State of informatio n concerning its duties, powers, and basis for its standards;

`(II) written, oral, or electronic reminders contai ning patient-specific or drug-specific (or both) information and suggested chang es in prescribing or dispensing practices, communicated in a manner designed to ensure the privacy of patient-related information;

`(III) use of face-to-face discussions between heal th care professionals who are experts in rational drug therapy and selected pres cribers and pharmacists who have been targeted for educational intervention, inc luding discussion of optimal prescribing, dispensing, or pharmacy care practices , and follow-up face-to-face discussions; and

`(IV) intensified review or monitoring of selected prescribers or dispensers.

The Board shall re-evaluate interventions after an appropriat e period of time to determine if the intervention improved the quality of drug t herapy, to evaluate the success of the interventions and make modifications as n ecessary.

`(D) ANNUAL REPORT- Each State shall require the DUR Board to prepare a report on an annual basis. The State shall submit a report on an an nual basis to the Secretary which shall include a description of the activities of the Board, including the nature and scope of the prospective and retrospectiv e drug use review programs, a summary of the interventions used, an assessment o f the impact of these educational interventions on quality of care, and an estim ate of the cost savings generated as a result of such program. The Secretary sha ll utilize such report in evaluating the effectiveness of each State's drug use review program.

`(h) ELECTRONIC CLAIMS MANAGEMENT-

`(1) IN GENERAL- In accordance with chapter 35 of title 44, Uni ted States Code (relating to coordination of Federal information policy), the Se cretary shall encourage each State agency to establish, as its principal means o f processing claims for covered outpatient drugs under this title, a point-of-sa le electronic claims management system, for the purpose of performing on-line, r eal time eligibility verifications, claims data capture, adjudication of claims, and assisting pharmacists (and other authorized persons) in applying for and re ceiving payment.

`(2) ENCOURAGEMENT- In order to carry out paragraph (1)--< /ul>

`(A) for calendar quarters during fiscal years 1991 and 199 2, expenditures under the State plan attributable to development of a system des cribed in paragraph (1) shall receive Federal financial participation under sect ion 1903(a)(3)(A)(i) (at a matching rate of 90 percent) if the State acquires, t hrough applicable competitive procurement process in the State, the most cost-ef fective telecommunications network and automatic data processing services and eq uipment; and

`(B) the Secretary may permit, in the procurement described in subparagraph (A) in the application of part 433 of title 42, Code of Federal Regulations, and parts 95, 205, and 307 of title 45, Code of Federal Regulation s, the substitution of the State's request for proposal in competitive procureme nt for advance planning and implementation documents otherwise required.

`(i) ANNUAL REPORT-

`(1) IN GENERAL- Not later than May 1 of each year the Secretar y shall transmit to the Committee on Finance of the Senate, the Committee on Ene rgy and Commerce of the House of Representatives, and the Committees on Aging of the Senate and the House of Representatives a report on the operation of this s ection in the preceding fiscal year.

`(2) DETAILS- Each report shall include information on--

`(A) ingredient costs paid under this title for single sour ce drugs, multiple source drugs, and nonprescription covered outpatient drugs;

`(B) the total value of rebates received and number of manu facturers providing such rebates;

`(C) how the size of such rebates compare with the size of rebates offered to other purchasers of covered outpatient drugs;
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`(D) the effect of inflation on the value of rebates requir ed under this section; and

`(E) trends in prices paid under this title for covered out patient drugs.

`(j) EXEMPTION OF ORGANIZED HEALTH CARE SETTINGS- (1) Health Mainte nance Organizations that operate drug formularies or drug formulary systems spec ifically designed to provide outpatient prescription drug benefits, including th ose organizations that contract under section 1903(m), are not subject to the re quirements of this section.

`(2) The State plan shall provide that hospitals providing medical assistance under such plan that such hospitals which bill the plan no more than the hospital's acquisition costs for covered outpatient drugs are not subject to the requirements of this section.

`(3) Nothing in this subsection shall be construed as providing tha t amounts for covered outpatient drugs paid by the institutions described in thi s subsection should not be taken into account for purposes of determining the be st price as described in subsection (c).

`(k) DEFINITIONS- In this section--

`(1) AVERAGE MANUFACTURER PRICE- The term `average manufacturer price' means, with respect to a covered outpatient drug of a manufacturer for a calendar quarter, the average price paid to the manufacturer for the drug in th e United States by wholesalers for drugs distributed to the retail pharmacy clas s of trade.

`(2) COVERED OUTPATIENT DRUG- Subject to the exceptions in para graph (3), the term `covered outpatient drug' means--

`(A) of those drugs which are treated as prescribed drugs f or purposes of section 1905(a)(12), a drug which may be dispensed only upon pres cription (except as provided in paragraph (5)), and--

`(i) which is approved for safety and effectiveness as a prescription drug under section 505 or 507 of the Federal Food, Drug, and Cosm etic Act or which is approved under section 505(j) of such Act;

`(ii)(I) which was commercially used or sold in the Uni ted States before the date of the enactment of the Drug Amendments of 1962 or wh ich is identical, similar, or related (within the meaning of section 310.6(b)(1) of title 21 of the Code of Federal Regulations) to such a drug, and (II) which has not been the subject of a final determination by the Secretary that it is a `new drug' (within the meaning of section 201(p) of the Federal Food, Drug, and Cosmetic Act) or an action brought by the Secretary under section 301, 302(a), o r 304(a) of such Act to enforce section 502(f) or 505(a) of such Act; or

`(iii)(I) which is described in section 107(c)(3) of th e Drug Amendments of 1962 and for which the Secretary has determined there is a compelling justification for its medical need, or is identical, similar, or rela ted (within the meaning of section 310.6(b)(1) of title 21 of the Code of Federa l Regulations) to such a drug, and (II) for which the Secretary has not issued a notice of an opportunity for a hearing under section 505(e) of the Federal Food , Drug, and Cosmetic Act on a proposed order of the Secretary to withdraw approv al of an application for such drug under such section because the Secretary has determined that the drug is less than effective for all conditions of use prescr ibed, recommended, or suggested in its labeling; and

`(B) a biological product, other than a vaccine which--

`(i) may only be dispensed upon prescription,

`(ii) is licensed under section 351 of the Public Healt h Service Act, and

`(iii) is produced at an establishment licensed under s uch section to produce such product; and

`(C) insulin certified under section 506 of the Federal Foo d, Drug, and Cosmetic Act.

`(3) LIMITING DEFINITION- The term `covered outpatient drug' do es not include any drug, biological product, or insulin provided as part of, or as incident to, and in the same setting as, any of the following (and for which payment may be made under this title as part of payment for the following and no t as direct reimbursement for the drug):

`(A) Inpatient hospital services.

`(B) Hospice services.

`(C) Dental services, except that drugs for which the State plan authorizes direct reimbursement to the dispensing dentist are covered outp atient drugs.

`(D) Physician office visits.

`(E) Outpatient hospital emergency room visits.

`(F) Outpatient surgical procedures.

Such term also does not include any such drug or product which is used for a medical indication which is not a medically accepted indication.

`(4) NONPRESCRIPTION DRUGS- If a State plan for medical assista nce under this title includes coverage of prescribed drugs as described in secti on 1905(a)(12) and permits coverage of drugs which may be sold without a prescri ption (commonly referred to as `over-the-counter' drugs), if they are prescribed by a physician (or other person authorized to prescribe under State law), such a drug shall be regarded as a covered outpatient drug.

`(5) MANUFACTURER- The term `manufacturer' means any entity whi ch is engaged in--

`(A) the production, preparation, propagation, compounding, conversion, or processing of prescription drug products, either directly or ind irectly by extraction from substances of natural origin, or independently by mea ns of chemical synthesis, or by a combination of extraction and chemical synthes is, or

`(B) in the packaging, repackaging, labeling, relabeling, o r distribution of prescription drug products.

Such term does not include a wholesale distributor of drugs or a retail pharmacy licensed under State law.

`(6) MEDICALLY ACCEPTED INDICATION- The term `medically accepte d indication' means any use for a covered outpatient drug which is approved unde r the Federal Food, Drug, and Cosmetic Act, which appears in peer-reviewed medic al literature or which is accepted by one or more of the following compendia: th e American Hospital Formulary Service-Drug Information, the American Medical Ass ociation Drug Evaluations, and the United States Pharmacopeia-Drug Information.

`(7) MULTIPLE SOURCE DRUG; INNOVATOR MULTIPLE SOURCE DRUG; NONI NNOVATOR MULTIPLE SOURCE DRUG; SINGLE SOURCE DRUG-

`(A) DEFINED-

`(i) MULTIPLE SOURCE DRUG- The term `multiple source dr ug' means, with respect to a calendar quarter, a covered outpatient drug (not in cluding any drug described in paragraph (5)) for which there are 2 or more drug products which--

`(I) are rated as therapeutically equivalent (under the Food and Drug Administration's most recent publication of `Approved Drug Pr oducts with Therapeutic Equivalence Evaluations'),

`(II) except as provided in subparagraph (B), are p harmaceutically equivalent and bioequivalent, as defined in subparagraph (C) and as determined by the Food and Drug Administration, and

`(III) are sold or marketed in the State during the period.

`(ii) INNOVATOR MULTIPLE SOURCE DRUG- The term `innovat or multiple source drug' means a multiple source drug that was originally market ed under an original new drug application approved by the Food and Drug Administ ration.

`(iii) NONINNOVATOR MULTIPLE SOURCE DRUG- The term `non innovator multiple source drug' means a multiple source drug that is not an inno vator multiple source drug.

`(iv) SINGLE SOURCE DRUG- The term `single source drug' means a covered outpatient drug which is produced or distributed under an origi nal new drug application approved by the Food and Drug Administration, including a drug product marketed by any cross-licensed producers or distributers operati ng under the new drug application.

`(B) EXCEPTION- Subparagraph (A)(i)(II) shall not apply if the Food and Drug Administration changes by regulation the requirement that, for purposes of the publication described in subparagraph (A)(i)(I), in order for d rug products to be rated as therapeutically equivalent, they must be pharmaceuti cally equivalent and bioequivalent, as defined in subparagraph (C).

`(C) DEFINITIONS- For purposes of this paragraph--

`(i) drug products are pharmaceutically equivalent if t he products contain identical amounts of the same active drug ingredient in the same dosage form and meet compendial or other applicable standards of strength, quality, purity, and identity;

`(ii) drugs are bioequivalent if they do not present a known or potential bioequivalence problem, or, if they do present such a problem , they are shown to meet an appropriate standard of bioequivalence; and

`(iii) a drug product is considered to be sold or marke ted in a State if it appears in a published national listing of average wholesal e prices selected by the Secretary, provided that the listed product is generall y available to the public through retail pharmacies in that State.

`(8) STATE AGENCY- The term `State agency' means the agency des ignated under section 1902(a)(5) to administer or supervise the administration o f the State plan for medical assistance.'.

(b) FUNDING-

(1) DRUG USE REVIEW PROGRAMS- Section 1903(a)(3) (42 U.S.C. 193 6b(a)(3)) is amended--

(A) by striking `plus' at the end of subparagraph (C) and i nserting `and', and

(B) by adding at the end the following new subparagraph:

`(D) 75 percent of so much of the sums expended by the Stat e plan during a quarter in 1991, 1992, or 1993, as the Secretary determines is a ttributable to the statewide adoption of a drug use review program which conform s to the requirements of section 1927(g); plus'.

(2) TEMPORARY INCREASE IN FEDERAL MATCH FOR ADMINISTRATIVE COST S- The per centum to be applied under section 1903(a)(7) of the Social Security Act for amounts expended during calendar quarters in fiscal year 1991 which are attributable to administrative activities necessary to carry out section 1927 (o ther than subsection (g)) of such Act shall be 75 percent, rather than 50 percen t; after fiscal year 1991, the match shall revert back to 50 percent.
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(c) DEMONSTRATION PROJECTS-

(1) PROSPECTIVE DRUG UTILIZATION REVIEW-

(A) The Secretary of Health and Human Services shall provid e, through competitive procurement by not later than January 1, 1992, for the es tablishment of at least 10 statewide demonstration projects to evaluate the effi ciency and cost-effectiveness of prospective drug utilization review (as a compo nent of on-line, real-time electronic point-of-sales claims management) in fulfi lling patient counseling and in reducing costs for prescription drugs.

(B) Each of such projects shall establish a central electro nic repository for capturing, storing, and updating prospective drug utilization review data and for providing access to such data by participating pharmacists (and other authorized participants).

(C) Under each project, the pharmacist or other authorized participant shall assess the active drug regimens of recipients in terms of dupl icate drug therapy, therapeutic overlap, allergy and cross-sensitivity reactions , drug interactions, age precautions, drug regimen compliance, prescribing limit s, and other appropriate elements.

(D) Not later than January 1, 1994, the Secretary shall sub mit to Congress a report on the demonstration projects conducted under this para graph.

(2) DEMONSTRATION PROJECT ON COST-EFFECTIVENESS OF REIMBURSEMEN T FOR PHARMACISTS' COGNITIVE SERVICES-

(A) The Secretary of Health and Human Services shall conduc t a demonstration project to evaluate the impact on quality of care and cost-eff ectiveness of paying pharmacists under title XIX of the Social Security Act, whe ther or not a drug is dispensed, for drug use review services. For this purpose, the Secretary shall provide for no fewer than 5 demonstration sites in differen t States and the participation of a significant number of pharmacists.

(B) Not later than January 1, 1995, the Secretary shall sub mit a report to the Congress on the results of the demonstration project conduct ed under subparagraph (A).

(d) STUDIES-

(1) STUDY OF DRUG PURCHASING AND BILLING ACTIVITIES OF VARIOUS HEALTH CARE SYSTEMS-

(A) The Comptroller General shall conduct a study of the dr ug purchasing and billing practices of hospitals, other institutional facilities , and managed care plans which provide covered outpatient drugs in the medicaid program. The study shall compare the ingredient costs of drugs for medicaid pres criptions to these facilities and plans and the charges billed to medical assist ance programs by these facilities and plans compared to retail pharmacies.< /ul>

(B) The study conducted under this subsection shall include an assessment of--

(i) the prices paid by these institutions for covered o utpatient drugs compared to prices that would be paid under this section,

(ii) the quality of outpatient drug use review provided by these institutions as compared to drug use review required under this sectio n, and

(iii) the efficiency of mechanisms used by these instit utions for billing and receiving payment for covered outpatient drugs dispensed under this title.

(C) By not later than May 1, 1991, the Comptroller General shall report to the Secretary of Health and Human Services (hereafter in this se ction referred to as the `Secretary'), the Committee on Finance of the Senate, t he Committee on Energy and Commerce of the House of Representatives, and the Com mittees on Aging of the Senate and the House of Representatives on the study con ducted under subparagraph (A).

(2) REPORT ON DRUG PRICING- By not later than May 1 of each yea r, the Comptroller General shall submit to the Secretary, the Committee on Finan ce of the Senate, the Committee on Energy and Commerce of the House of Represent atives, and the Committees on Aging of the Senate and House of Representatives a n annual report on changes in prices charged by manufacturers for prescription d rugs to the Department of Veterans Affairs, other Federal programs, retail and h ospital pharmacies, and other purchasing groups and managed care plans.

(3) STUDY ON PRIOR APPROVAL PROCEDURES-

(A) The Secretary, acting in consultation with the Comptrol ler General, shall study prior approval procedures utilized by State medical ass istance programs conducted under title XIX of the Social Security Act, including --

(i) the appeals provisions under such programs; and

(ii) the effects of such procedures on beneficiary and provider access to medications covered under such programs.
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(B) By not later than December 31, 1991, the Secretary and the Comptroller General shall report to the Committee on Finance of the Senate, the Committee on Energy and Commerce of the House of Representatives, and the Co mmittees on Aging of the Senate and the House of Representatives on the results of the study conducted under subparagraph (A) and shall make recommendations wit h respect to which procedures are appropriate or inappropriate to be utilized by State plans for medical assistance.

(4) STUDY ON REIMBURSEMENT RATES TO PHARMACISTS-

(A) The Secretary shall conduct a study on (i) the adequacy of current reimbursement rates to pharmacists under each State medical assistan ce programs conducted under title XIX of the Social Security Act; and (ii) the extent to which reimbursement rates under such programs have an effect on benefi ciary access to medications covered and pharmacy services under such programs.

(B) By not later than December 31, 1991, the Secretary shal l report to the Committee on Finance of the Senate, the Committee on Energy and Commerce of the House of Representatives, and the Committees on Aging of the Sen ate and the House of Representatives on the results of the study conducted under subparagraph (A).

(5) STUDY OF PAYMENTS FOR VACCINES- The Secretary of Health and Human Services shall undertake a study of the relationship between State medica l assistance plans and Federal and State acquisition and reimbursement policies for vaccines and the accessibility of vaccinations and immunization to children provided under this title. The Secretary shall report to the Congress on the Stu dy not later than one year after the date of the enactment of this Act.

(6) STUDY ON APPLICATION OF DISCOUNTING OF DRUGS UNDER MEDICAR E- The Comptroller General shall conduct a study examining methods to encourage providers of items and services under title XVIII of the Social Security Act to negotiate discounts with suppliers of prescription drugs to such providers. The Comptroller General shall submit to Congress a report on such study no later tha n 1 year after the date of enactment of this subsection.

PART II--PURCHASE OF PRIVATE INSURANCE

SEC. 6211. STATES REQUIRED TO PAY PREMIUMS, DEDUCTIBLES, AND COINSURA NCE FOR PRIVATE HEALTH INSURANCE COVERAGE FOR MEDICAID BENEFICIARIES WHERE COST EFFECTIVE.

(a) STATE PLAN REQUIREMENT- Section 1902(a) (42 U.S.C. 1396a(a)), a s amended by section 6201, is further amended--

(1) by striking `and' at the end of paragraph (53);

(2) by striking the period at the end of paragraph (54) and ins erting `; and'; and

(3) by adding at the end the following new paragraph:

`(55) meet the requirements of section 1928 (relating to paymen t of premiums, deductibles, and coinsurance for private health insurance).'.

(b) DESCRIPTION OF REQUIREMENT- Title XIX (42 U.S.C. 1396 et seq.), as amended by section 6201, is further amended--

(1) by redesignating section 1928 as section 1929; and

(2) by inserting after section 1927 the following new section:

`PAYMENT OF PREMIUMS FOR PRIVATE HEALTH INSURANCE

`SEC. 1928. (a) REQUIREMENT- Notwithstanding any other provision of this title, each State plan approved under this title shall provide that with r espect to individuals eligible for medical assistance under this title that the State shall pay premiums, deductibles, and coinsurance for private health insura nce policies (as defined in subsection (d)) on behalf of such individuals and, w here appropriate, the individuals' family members, when it is cost effective to do so.

`(b) DETERMINATION OF COST EFFECTIVENESS- The Secretary shall promu lgate regulations providing criteria for determining cost effectiveness for purp oses of this section. In promulgating regulations under this subsection the Secr etary shall consider:

(1) the duration of the time period to be considered by States in determining cost effectiveness;

(2) whether States in determining cost effectiveness, may base such determination on individual circumstances or actuarial categories, and, if based on actuarial categories whether States should be permitted to categorize a ctuarial groups on the basis of diagnosis; and

(3) the circumstances under which States should pay premiums, d eductibles, and coinsurance for non-medicaid eligible family members of individu als eligible for medical assistance under this title.

`(c) SCOPE OF COVERAGE- Each State shall ensure that as part of its State plan approved under this title that where the State makes payments for pr emiums, deductibles, or coinsurance for private health insurance coverage on beh alf of an individual who is eligible for medical assistance under this section, that if such private health coverage does not cover an item or service or does n ot cover an item or service to the same extent as such item or service is covere d under the State plan approved under this title that the State shall provide un der such State plan any additional benefits necessary to provide such individual with coverage as comprehensive in amount, duration, and scope as medical assist ance provided under the State plan approved under this title.

`(d) PRIVATE HEALTH INSURANCE DEFINED- For purposes of this section , the term `private health insurance policy' includes employment-related health insurance, group health insurance, membership in private health maintenance orga nizations, or such other private health insurance as the Secretary may specify.' .

(c) CONFORMING AMENDMENTS-

(1) LIMITATION ON AMOUNT, DURATION, AND SCOPE OF BENEFITS MODIF IED- Section 1902(a)(10) (42 U.S.C. 1396a(a)(10)) is amended in the matter follo wing subparagraph (E)--

(A) by striking `and' at the end of subdivision (IX);< /ul>

(B) by inserting `and' at the end of subdivision (X); and

(C) by adding at the end the following new subdivision:

`(XI) the making available of medical assistance to cover the costs of premiums, deductibles, and coinsurance for certain individua ls for private health coverage as described in section 1928 shall not, by reason of paragraph (10), require the making available of any such benefits or the mak ing available of services of the same amount, duration, and scope of such privat e coverage to any other individuals;'.

(2) PREMIUMS INCLUDED AS MEDICAL ASSISTANCE- Section 1905(a) (4 2 U.S.C. 1396d(a)) is amended--

(A) by striking `and' at the end of paragraph (21);

(B) by redesignating paragraph (22) as paragraph (23); and

(C) by inserting after paragraph (21) the following new par agraph:

`(22) premiums, deductibles, and coinsurance for private health insurance coverage where cost effective (as provided in section 1928); and'.

(d) EFFECTIVE DATE- (1) The amendments made by this section shall become effective with respect to payments for calendar quarters beginning on or after January 1, 1991.

(2) In the case of a State plan for medical assistance under title XIX of the Social Security Act which the Secretary of Health and Human Services determines requires State legislation (other than legislation authorizing or app ropriating funds) in order for the plan to meet the additional requirements impo sed by the amendments made by subsection (a), the State plan shall not be regard ed as failing to comply with the requirements of such title solely on the basis of its failure to meet this additional requirement before the first day of the f irst calendar quarter beginning after the close of the first regular session of the State legislature that begins after the date of the enactment of this Act. F or purposes of the previous sentence, in the case of a State that has a 2-year l egislative session, each year of such session shall be deemed to be a separate r egular session of the State legislature.

PART III--LOW-INCOME ELDERLY

SEC. 6221. 1-YEAR ACCELERATION OF AND INCREASE IN OPTION AMOUNT FOR B UY-IN OF PREMIUMS AND COST SHARING FOR INDIGENT MEDICARE BENEFICIARIES.

(a) OPTION UP TO 133 PERCENT OF POVERTY LINE- Section 1905(p)(2)(A) (42 U.S.C. 1396d(p)(2)(A)) is amended by striking `100' and inserting `133'.

(b) REQUIRED 1-YEAR ACCELERATION TO 100 PERCENT OF POVERTY LINE- Se ction 1905(p)(2) (42 U.S.C. 1396d(p)(2)) is further amended--

(1) in subparagraph (B)--

(A) by adding `and' at the end of clause (ii);

(B) in clause (iii), by striking `95 percent, and' and inse rting `100 percent.'; and

(C) by striking clause (iv); and

(2) in subparagraph (C)--

(A) in clause (iii), by striking `90' and inserting `95';

(B) by adding `and' at the end of clause (iii);

(C) in clause (iv), by striking `95 percent, and' and inser ting `100 percent.'; and

(D) by striking clause (v).

(c) EFFECTIVE DATE- (1) The amendment made by subsection (a) and, e xcept as provided in paragraph (2), the amendments made by subsection (b) shall become effective with respect to payments for calendar quarters beginning on or after January 1, 1991.

(2) In the case of a State plan for medical assistance under title XIX of the Social Security Act which the Secretary of Health and Human Services determines requires State legislation (other than legislation authorizing or app ropriating funds) in order for the plan to meet the additional requirements impo sed by the amendments made by this section, the State plan shall not be regarded as failing to comply with the requirements of such title solely on the basis of its failure to meet this additional requirement before the first day of the fir st calendar quarter beginning after the close of the first regular session of th e State legislature that begins after the date of the enactment of this Act. For purposes of the previous sentence, in the case of a State that has a 2-year leg islative session, each year of such session shall be deemed to be a separate reg ular session of the State legislature.

SEC. 6222. DELAY IN COUNTING SOCIAL SECURITY COLA INCREASES UNTIL NEW POVERTY GUIDELINES IMPLEMENTED.

(a) IN GENERAL- Section 1905(p) of the Social Security Act (42 U.S. C. 1396d(p)) is amended--

(1) in subparagraph (B) of paragraph (1), by inserting `, excep t as provided in paragraph (2)(D) of this subsection,' after `supplementary secu rity income program'; and

(2) by adding at the end of paragraph (2) the following new sub paragraph:

`(D)(i) In making a determination or redetermination of income under this subsection for a transition month (as defined in clause (ii) of this subparagraph) for an individual who is eligible to receive insurance benefits un der title II of this Act, such determination or redetermination shall exclude an y amount of income attributable to a cost-of-living increase in the level of mon thly insurance benefits under title II (as described in section 215(i)) received or anticipated to be received for that calendar year for which the determinatio n or redetermination is made.

`(ii) For purposes of this subparagraph, the term `transition m onth' means each month in a calendar year during a period beginning January 1 an d ending the last day of the month in which the State agency implements the annu al revision of the official poverty line (as described in subparagraph (A)) publ ished during that calendar year.

(b) EFFECTIVE DATE- The amendments made by this section shall apply to determinations or redeterminations of income for months beginning on or afte r January 1, 1991.

PART IV--CHILD HEALTH

SEC. 6231. MEDICAID CHILD HEALTH PROVISIONS.

(a) PHASED-IN MANDATORY COVERAGE OF CHILDREN UP TO 100 Percent of P overty Level-

(1) IN GENERAL- Section 1902 (42 U.S.C. 1396a) is amended--

(A) in subsection (a)(10)(A)(i)--

(i) by striking `or' at the end of subclause (V),< /ul>

(ii) by striking the semicolon at the end of subclause (VI) and inserting `, or', and

(iii) by adding at the end the following new subclause:

`(VII) who are described in subparagraph (D) of sub section (l)(1) and whose family income does not exceed the income level the Stat e is required to establish under subsection (l)(2)(C) for such a family;';< /ul>

(B) in subsection (a)(10)(A)(ii)(IX), by striking `or claus e (i)(VI)' and inserting `, clause (i)(VI), or clause (i)(VII)';
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(C) in subsection (l)--

(i) in subparagraph (C) of paragraph (1) by inserting ` children' after `(C)';

(ii) by striking subparagraph (D) of paragraph (1) and inserting the following:

`(D) children born after September 30, 1983, who have attained 6 years of age but have not attained 19 years of age,';

(iii) by striking subparagraph (C) of paragraph (2) and inserting the following:

`(C) For purposes of paragraph (1) with respect to individuals desc ribed in subparagraph (D) of that paragraph, the State shall establish an income level which is equal to 100 percent of the income official poverty line describ ed in subparagraph (A) applicable to a family of the size involved.';

(iv) in paragraph (3) by inserting `, (a)(10)(A)(i)(VII ),' after `(a)(10)(A)(i)(VI)';

(v) in paragraph (4)(A), by inserting `or subsection (a )(10)(A)(i)(VII)' after `(a)(10)(A)(i)(VI)'; and

(vi) in paragraph (4)(B), by striking `or (a)(10)(A)(i) (VI)' `, and inserting `(a)(10)(A)(i)(VI), or (a)(10)(A)(i)(VII)'; and

(D) in subsection (r)(2)(A), by inserting `(a)(10)(A)(i)(VI I),' after `(a)(10)(A)(i)(VI),'.

(2) CONFORMING AMENDMENT TO QUALIFIED CHILDREN- Section 1905(n) (2) (42 U.S.C. 1396d(n)(2)) is amended by striking `age of 7 (or any age designa ted by the State that exceeds 7 but does not exceed 8)' and inserting `age of 19 '.

(3) ADDITIONAL CONFORMING AMENDMENTS-

(A) Section 1903(f)(4) of such Act (42 U.S.C. 1396b(f)(4)) is amended--

(i) by striking `1902(a)(10)(A)(i)(IV),' and inserting `1902(a)(10)(A)(i)(III), 1902(a)(10)(A)(i)(IV), 1902(a)(10)(A)(i)(V),', and

(ii) by inserting `1902(a)(10)(A)(i)(VII),' after `1902 (a)(10)(A)(i)(VI),'.

(B) Subsections (a)(3)(C) and (b)(3)(C)(i) of section 1925 of such Act (42 U.S.C. 1396r-6), as amended by section 6411(i)(3) of the Omnibus Budget Reconciliation Act of 1989, are each amended by inserting `(i)(VII),' af ter `(i)(VI)'.

(4) EFFECTIVE DATE- (A) The amendments made by this subsection apply (except as otherwise provided in this subsection) to payments under title XIX of the Social Security Act for calendar quarters beginning on or after July 1, 1991.

(B) In the case of a State plan for medical assistance under ti tle XIX of the Social Security Act which the Secretary of Health and Human Servi ces determines requires State legislation (other than legislation authorizing or appropriating funds) in order for the plan to meet the additional requirements imposed by the amendments made by this subsection, the State plan shall not be r egarded as failing to comply with the requirements of such title solely on the b asis of its failure to meet these additional requirements before the first day o f the first calendar quarter beginning after the close of the first regular sess ion of the State legislature that begins after the date of the enactment of this Act. For purposes of the previous sentence, in the case of a State that has a 2 -year legislative session, each year of such session shall be deemed to be a sep arate regular session of the State legislature.

(b) OPTIONAL COVERAGE OF CHILDREN WITH INCOME BELOW 185 Percent of the Poverty Level-

(1) FLEXIBILITY ON INCOME LIMIT- Section 1902, as amended by su bsection (a) of this section, is amended--

(A) in subclauses (VI) and (VII) of subsection (a)(10)(A)(i ), by inserting `minimum' before `income level',

(B) in subsection (l)(2)(B), by striking `133 percent' and inserting `a percentage (established by the State, which is not less than 133 pe rcent and not more than 185 percent)'; and

(C) in subsection (l)(2)(C), by striking `100 percent' and inserting `a percentage (established by the State, which is not less than 100 pe rcent and not more than 185 percent)'.

(2) FLEXIBILITY ON AGE- Section 1902(l)(1) of such Act is amend ed--

(A) by striking `and' at the end of subparagraph (C),< /ul>

(B) by inserting `and' at the end of subparagraph (D), and

(C) by adding at the end thereof the following:

`(E) at the option of the State, children born after Octobe r 1, 1983, who have attained 6 years of age but have not attained 19 years of ag e or a lesser age as selected by the State,'.

(3) EFFECTIVE DATE- (A) The amendments made by this subsection shall apply to payments under title XIX of the Social Security Act for calendar quarters beginning on or after July 1, 1991.

(B) In the case of a State plan for medical assistance under ti tle XIX of the Social Security Act which the Secretary of Health and Human Servi ces determines requires State legislation (other than legislation authorizing or appropriating funds) in order for the plan to meet the additional requirements imposed by the amendments made by this subsection, the State plan shall not be r egarded as failing to comply with the requirements of such title solely on the b asis of its failure to meet these additional requirements before the first day o f the first calendar quarter beginning after the close of the first regular sess ion of the State legislature that begins after the date of the enactment of this Act. For purposes of the previous sentence, in the case of a State that has a 2 -year legislative session, each year of such session shall be deemed to be a sep arate regular session of the State legislature.

(c)(1) CONTINUOUS ELIGIBILITY FOR MEDICAID BENEFITS FOR A PERIOD OF 1 YEAR PROVIDED FOR INFANTS BORN TO MEDICAID ELIGIBLE WOMEN- Section 1902(e)(4) (42 U.S.C. 1396a(e)(4)) is amended--

(A) in the first sentence, by striking `and the woman remai ns eligible for such assistance' and inserting `if the woman would have remained eligible for such assistance were it not for the termination of her pregnancy o r post-partum period'; and

(B) in the second sentence--

(i) by striking `unless' and inserting `if'; and

(ii) by striking `expires' and inserting `expires no ne w application for such child shall be required'.

(2) EFFECTIVE DATE- (A) The amendment made by paragraph (1), shall become effective with respect to eligibility determinations for medical assistan ce under title XIX of the Social Security Act on or after July 1, 1991.

(B) In the case of a State plan for medical assistance under ti tle XIX of the Social Security Act which the Secretary of Health and Human Servi ces determines requires State legislation (other than legislation authorizing or appropriating funds) in order for the plan to meet the additional requirements imposed by the amendments made by this subsection, the State plan shall not be r egarded as failing to comply with the requirements of such title solely on the b asis of its failure to meet these additional requirements before the first day o f the first calendar quarter beginning after the close of the first regular sess ion of the State legislature that begins after the date of the enactment of this Act. For purposes of the previous sentence, in the case of a State that has a 2 -year legislative session, each year of such session shall be deemed to be a sep arate regular session of the State legislature.

(d) Adjustment in Payment for Hospital Services Furnished to Low-In come Children-

(1) IN GENERAL- Section 1902 (42 U.S.C. 1396a) is amended by ad ding at the end the following new subsection:

`(s) In order to meet the requirements of subsection (a)(54), the S tate plan must provide that payments to hospitals under the plan for inpatient h ospital services furnished to infants who have not attained the age of 1 year, a nd to children who have not attained the age of 19 years and who receive such se rvices in a disproportionate share hospital described in section 1923(b)(1), sha ll--

`(1) if made on a prospective basis (whether per diem, per case , or otherwise) provide for an outlier adjustment in payment amounts for medical ly necessary inpatient hospital services involving exceptionally high costs or e xceptionally long lengths of stay,

`(2) not be limited by the imposition of day limits with respec t to the delivery of such services to such individuals, and

`(3) not be limited by the imposition of dollar limits (other t han such limits resulting from prospective payments as adjusted pursuant to para graph (1)) with respect to the delivery of such services to any such individual who has not attained their first birthday (or in the case of such an individual who is an inpatient on his first birthday until such individual is discharged).' .

(2) CONFORMING AMENDMENT- Section 1902(a) (42 U.S.C. 1396a(a)), as amended by section 6211(a), is further amended--

(A) by striking `and' at the end of paragraph (54);

(B) by striking the period at the end of paragraph (55) and by inserting `; and'; and

(C) by inserting after paragraph (56) and before the end ma tter the following new paragraph:

`(56) provide, in accordance with subsection (s), for adjusted payments for certain inpatient hospital services.'.

(3) PROHIBITION ON WAIVER- Section 1915(b) (42 U.S.C. 1396n(b)) is amended in the matter preceding paragraph (1) by inserting `(other than subs ection (s))' after `Section 1902'.

(4) EFFECTIVE DATE- (A) The amendments made by this subsection shall become effective with respect to payments under title XIX of the Social Se curity Act for calendar quarters beginning on or after July 1, 1991.

(B) In the case of a State plan for medical assistance under ti tle XIX of the Social Security Act which the Secretary of Health and Human Servi ces determines requires State legislation (other than legislation authorizing or appropriating funds) in order for the plan to meet the additional requirements imposed by the amendments made by this subsection, the State plan shall not be r egarded as failing to comply with the requirements of such title solely on the b asis of its failure to meet these additional requirements before the first day o f the first calendar quarter beginning after the close of the first regular sess ion of the State legislature that begins after the date of the enactment of this Act. For purposes of the previous sentence, in the case of a State that has a 2 -year legislative session, each year of such session shall be deemed to be a sep arate regular session of the State legislature.

PART V--HOME AND COMMUNITY-BASED SERVICES

SEC. 6241. HOME AND COMMUNITY-BASED CARE AS OPTIONAL SERVICE.
(a) PROVISION AS OPTIONAL SERVICE- Section 1905(a) (42 U.S.C. 1396d (a)), as amended by section 6201, is further amended--

(1) by striking `and' at the end of paragraph (22);

(2) by redesignating paragraph (23) as paragraph (24); and

(3) by inserting after paragraph (22) the following new paragra ph:

`(23) home community care (to the extent allowed and as defined in section 1929) for functionally disabled elderly individuals; and'.

(b) HOME AND COMMUNITY CARE FOR FUNCTIONALLY DISABLED ELDERLY INDIV IDUALS- Title XIX (42 U.S.C. 1396 et seq.) as amended by section 6211 is further amended--

(1) by redesignating section 1929 as section 1930; and

(2) by inserting after section 1928 the following new section:

`HOME AND COMMUNITY CARE FOR FUNCTIONALLY DISABLED ELDERLY INDIVIDUAL S

`SEC. 1929. (a) HOME AND COMMUNITY CARE DEFINED- In this title, the term `home and community care' means one or more of the following services furn ished to an individual who has been determined, after an assessment under subsec tion (c), to be a functionally disabled elderly individual, furnished in accorda nce with an individual community care plan (established and periodically reviewe d and revised by a qualified community care case manager under subsection (d)):

`(1) Homemaker/home health aide services.

`(2) Chore services.

`(3) Personal care services.

`(4) Nursing care services provided by, or under the supervisio n of, a registered nurse.

`(5) Respite care.

`(6) Training for family members in managing the individual.

`(7) Adult day health services.

`(8) In the case of an individual with chronic mental illness, day treatment or other partial hospitalization, psychosocial rehabilitation serv ices, and clinic services (whether or not furnished in a facility).

`(9) Such other home and community-based services (other than r oom and board) as the Secretary may approve.

`(b) FUNCTIONALLY DISABLED ELDERLY INDIVIDUAL DEFINED-

`(1) IN GENERAL- In this title, the term `functionally disabled elderly individual' means an individual who--

`(A) is 65 years of age or older,

`(B) is determined to be a functionally disabled individual under subsection (c), and

`(C) subject to section 1902(f) (as applied consistent with section 1902(r)(2)), is receiving supplemental security income benefits under t itle XVI (or under a State plan approved under title XVI) or, at the option of t he State, is described in section 1902(a)(10)(C).

`(2) TREATMENT OF CERTAIN INDIVIDUALS PREVIOUSLY COVERED UNDER A WAIVER- (A) In the case of a State which--

`(i) at the time of its election to provide coverage for ho me and community care under this section has a waiver approved under section 191 5(c) or 1915(d) with respect to individuals 65 years of age or older, and

`(ii) subsequently discontinues such waiver, individuals wh o were eligible for benefits under the waiver as of the date of its discontinuan ce and who would, but for income or resources, be eligible for medical assistanc e for home and community care under the plan shall, notwithstanding any other pr ovision of this title, be deemed a functionally disabled elderly individual for so long as the individual would have remained eligible for medical assistance un der such waiver.

`(B) In the case of a State which, as of December 31, 1990, had in effect a waiver under section 1115 that provides under the State plan under this title for personal care services for functionally disabled individuals, the term `functionally disabled elderly individual' may include, at the option of t he State, an individual who--

`(i) is 65 years of age or older or is disabled (as determi ned under the supplemental security income program under title XVI);

`(ii) is determined to meet the test of functional disabili ty applied under the waiver as of such date; and

`(iii) meets the resource requirement and income standard t hat apply in the State to individuals described in section 1902(a)(10)(A)(ii)(V) .

`(3) USE OF PROJECTED INCOME- In applying section 1903(f)(1) in determining the eligibility of an individual (described in section 1902(a)(10)( C)) for medical assistance for home and community care, a State may, at its opti on, provide for the determination of the individual's anticipated medical expens es (to be deducted from income) over a period of up to 6 months.

`(c) DETERMINATIONS OF FUNCTIONAL DISABILITY-

`(1) IN GENERAL- In this section, an individual is `functionall y disabled' if the individual--

`(A) is unable to perform without substantial assistance fr om another individual at least 2 of the following 3 activities of daily living: toileting, transferring, and eating; or

`(B) has a primary or secondary diagnosis of Alzheimer's di sease and is (i) unable to perform without substantial human assistance (includi ng verbal reminding or physical cueing) or supervision at least 2 of the followi ng 5 activities of daily living: bathing, dressing, toileting, transferring, and eating; or (ii) cognitively impaired so as to require substantial supervision f rom another individual because he or she engages in inappropriate behaviors that pose serious health or safety hazards to himself or herself or others.

`(2) ASSESSMENTS OF FUNCTIONAL DISABILITY-

`(A) REQUESTS FOR ASSESSMENTS- If a State has elected to pr ovide home and community care under this section, upon the request of an individ ual who is 65 years of age or older and who meets the requirements of subsection (b)(1)(C) (or another person on such individual's behalf), the State shall prov ide for a comprehensive functional assessment under this subparagraph which--

`(i) is used to determine whether or not the individual is functionally disabled,

`(ii) is based on a uniform minimum data set specified by the Secretary under subparagraph (C)(i), and

`(iii) uses an instrument which has been specified by t he State under subparagraph (B).

No fee may be charged for such an assessment.
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`(B) SPECIFICATION OF ASSESSMENT INSTRUMENT- The State shal l specify the instrument to be used in the State in complying with the requireme nt of subparagraph (A)(iii) which instrument shall be--

`(i) one of the instruments designated under subparagra ph (C)(ii); or

`(ii) an instrument which the Secretary has approved as being consistent with the minimum data set of core elements, common definitions , and utilization guidelines specified by the Secretary in subparagraph (C)(i).

`(C) SPECIFICATION OF ASSESSMENT DATA SET AND INSTRUMENTS- The Secretary shall--

`(i) not later than July 1, 1991--
< /ul>
`(I) specify a minimum data set of core elements an d common definitions for use in conducting the assessments required under subpar agraph (A); and

`(II) establish guidelines for use of the data set; and

`(ii) by not later than July 1, 1991, designate one or more instruments which are consistent with the specification made under subparag raph (A) and which a State may specify under subparagraph (B) for use in complyi ng with the requirements of subparagraph (A).

`(D) PERIODIC REVIEW- Each individual who qualifies as a fu nctionally disabled elderly individual shall have the individual's assessment pe riodically reviewed and revised not less often than once every 12 months.

`(E) CONDUCT OF ASSESSMENT BY INTERDISCIPLINARY TEAMS- An a ssessment under subparagraph (A) and a review under subparagraph (D) must be con ducted by an interdisciplinary team designated by the State. The Secretary shall permit a State to provide for assessments and reviews through teams under contr acts--

`(i) with public organizations; or

`(ii) with nonpublic organizations which do not pro vide home and community care or nursing facility services and do not have a dire ct or indirect ownership or control interest in, or direct or indirect affiliati on or relationship with, an entity that provides, community care or nursing faci lity services.

`(F) CONTENTS OF ASSESSMENT- The interdisciplinary team mus t--

`(i) identify in each such assessment or review each in dividual's functional disabilities and need for home and community care, includi ng information about the individual's health status, home and community environm ent, and informal support system; and

`(ii) based on such assessment or review, determine whe ther the individual is (or continues to be) functionally disabled.

The results of such an assessment or review shall be used in establishing, reviewing, and revising the individual's ICCP under subsection (d) (1).

`(G) APPEAL PROCEDURES- Each State which elects to provide home and community care under this section must have in effect an appeals proces s for individuals adversely affected by determinations under subparagraph (F).

`(d) INDIVIDUAL COMMUNITY CARE PLAN (ICCP)-

`(1) INDIVIDUAL COMMUNITY CARE PLAN DEFINED- In this section, t he terms `individual community care plan' and `ICCP' mean, with respect to a fun ctionally disabled elderly individual, a written plan which--

`(A) is established, and is periodically reviewed and revis ed, by a qualified case manager after a face-to-face interview with the individu al or primary caregiver and based upon the most recent comprehensive functional assessment of such individual conducted under subsection (c)(2);
< /ul>
`(B) specifies, within any amount, duration, and scope limi tations imposed on home and community care provided under the State plan, the ho me and community care to be provided to such individual under the plan, and indi cates the individual's preferences for the types and providers of services; and

`(C) may specify other services required by such individual .

An ICCP may also designate the specific providers (qualified to p rovide home and community care under the State plan) which will provide the home and community care described in subparagraph (B).

`(2) QUALIFIED CASE MANAGEMENT ENTITY DEFINED- In this section, the term `qualified case management entity' means a nonprofit or public agency or organization which--

`(A) has experience or has been trained in establishing, an d in periodically reviewing and revising, individual community care plans and in the provision of case management services to the elderly;

`(B) is responsible for (i) assuring that home and communit y care covered under the State plan and specified in the ICCP is being provided, (ii) visiting each individual's home or community setting where care is being p rovided not less often than once every 90 days, and (iii) informing the elderly individual or primary caregiver on how to contact the case manager if service pr oviders fail to properly provide services or other similar problems occur;< /ul>

`(C) in the case of a nonpublic agency, does not provide ho me and community care or nursing facility services and does not have a direct or indirect ownership or control interest in, or direct or indirect affiliation or relationship with, an entity that provides, home and community care or nursing facility services;

`(D) has procedures for assuring the quality of case manage ment services that includes a peer review process;

`(E) completes the ICCP in a timely manner and reviews and discusses new and revised ICCPs with elderly individuals or primary caregivers; and

`(F) meets such other standards, established by the Secreta ry, as to assure that--

`(i) such a manager is competent to perform case manage ment functions;

`(ii) individuals whose home and community care they ma nage are not at risk of financial exploitation due to such a manager; and

`(iii) meets such other standards as the State may esta blish.

`(3) APPEALS PROCESS- Each State which elects to provide home a nd community care under this section must have in effect an appeals process for individuals who disagree with the ICCP established.

`(e) CEILING ON PAYMENT AMOUNTS AND MAINTENANCE OF EFFORT-
`(1) CEILING ON PAYMENT AMOUNTS- Payments may not be made under section 1903(a) to a State for home and community care provided under this sect ion in a quarter to the extent that the medical assistance for such care in the quarter exceeds 50 percent of the product of--

`(A) the average number of individuals in the quarter recei ving such care under this section;

`(B) the average per diem rate of payment which the Secreta ry has determined (before the beginning of the quarter) will be payable under ti tle XVIII (without regard to coinsurance) for extended care services to be provi ded in the State during such quarter; and

`(C) the number of days in such quarter.

`(2) MAINTENANCE OF EFFORT-

`(A) ANNUAL REPORTS- As a condition for the receipt of paym ent under section 1903(a) with respect to medical assistance provided by a State for home and community care, the State shall report to the Secretary, with resp ect to each Federal fiscal year (beginning with fiscal year 1990) and in a forma t developed or approved by the Secretary, the amount of funds obligated by the S tate (including funds obligated by localities in the State) with respect to the provision of home and community care to the elderly in that fiscal year.

`(B) REDUCTION IN PAYMENT IF FAILURE TO MAINTAIN EFFORT- If the amount reported under subparagraph (A) by a State with respect to a fiscal year is less than the amount reported under subparagraph (A) with respect to fis cal year 1989, the Secretary shall provide for a reduction in payments to the St ate under section 1903(a) in an amount equal to the difference between the amoun ts so reported.

`(f) MINIMUM REQUIREMENTS FOR HOME AND COMMUNITY CARE-

`(1) REQUIREMENTS- Home and Community care provided under this section must meet such requirements for individuals' rights and quality as are p ublished or developed by the Secretary under subsection (k). Such requirements s hall include--

`(A) the requirement that individuals providing care are co mpetent to provide such care; and

`(B) the rights specified in paragraph (2).
< /ul>
`(2) SPECIFIED RIGHTS- The rights specified in this paragraph a re as follows:

`(A) The right to be fully informed in advance, orally and in writing, of the care to be provided, to be fully informed in advance of any c hanges in care to be provided, and (except with respect to an individual determi ned incompetent) to participate in planning care or changes in care. In cases of incompetence, these same rights shall apply to the primary caregiver or family member.

`(B) The right to voice grievances with respect to services that are (or fail to be) furnished without discrimination or reprisal for voici ng grievances, and to be told how to complain to State and local authorities.

`(C) The right to confidentiality of personal and clinical records.

`(D) The right to privacy and to have one's property treate d with respect.

`(E) The right to refuse all or part of any care and to be informed of the likely consequences of such refusal.

`(F) The right to education or training for oneself and for members of one's family or household on the management of care.
< /ul>
`(G) The right to be free from physical or mental abuse, co rporal punishment, and any physical or chemical restraints imposed for purposes of discipline or convenience and not included in an individual's ICCP.

`(H) The right to be fully informed orally and in writing o f the individual's rights.

`(I) Any other rights established by the Secretary.

`(g) MINIMUM REQUIREMENTS FOR SMALL COMMUNITY CARE SETTINGS- < /ul>
`(1) SMALL COMMUNITY CARE SETTINGS DEFINED- In this section, th e term `small community care setting' means--

`(A) a nonresidential setting that serves more than 2 and l ess than 8 individuals; or

`(B) a residential setting in which more than 2 and less th an 8 unrelated adults reside and in which personal services (other than merely b oard) are provided in conjunction with residing in the setting.

`(2) MINIMUM REQUIREMENTS- A small community care setting in wh ich community care is provided under this section must--

`(A) meet such requirements as are published or developed b y the Secretary under subsection (k);

`(B) meet the requirements of paragraphs (1)(A), (1)(C), (1 )(D), (3), and (6) of section 1919(c), to the extent applicable to such a settin g;

`(C) inform each individual receiving community care under this section in the setting, orally and in writing at the time the individual fi rst receives community care in the setting, of the individual's legal rights wit h respect to such a setting and the care provided in the setting;

`(D) meet any applicable State or local requirements regard ing certification or licensure;

`(E) meet any applicable State and local zoning, building, and housing codes, and State and local fire and safety regulations; and

`(F) be designed, constructed, equipped, and maintained in a manner to protect the health and safety of residents.

`(h) MINIMUM REQUIREMENTS FOR LARGE COMMUNITY CARE SETTINGS- < /ul>
`(1) LARGE COMMUNITY CARE SETTING DEFINED- In this section, the term `large community care setting' means--

`(A) a nonresidential setting in which more than 8 individu als are served; or

`(B) a residential setting in which more than 8 unrelated a dults reside and in which personal services are provided in conjunction with res iding in the setting in which home and community care under this section is prov ided.

`(2) MINIMUM REQUIREMENTS- A large community care setting in wh ich community care is provided under this section must--

`(A) meet such requirements as are published or developed b y the Secretary under subsection (k);

`(B) meet the requirements of paragraphs (1)(A), (1)(C), (1 )(D), (3), and (6) of section 1919(c), to the extent applicable to such a settin g;

`(C) inform each individual receiving community care under this section in the setting, orally and in writing at the time the individual fi rst receives home and community care in the setting, of the individual's legal r ights with respect to such a setting and the care provided in the setting; and

`(D) meet the requirements of paragraphs (2) and (3) of sec tion 1919(d) (relating to administration and other matters) in the same manner a s such requirements apply to nursing facilities under such section; except that, in applying the requirement of section 1919(d)(2) (relating to life safety code ), the Secretary shall provide for the application of such life safety requireme nts (if any) that are appropriate to the setting.

`(3) DISCLOSURE OF OWNERSHIP AND CONTROL INTERESTS AND EXCLUSIO N OF REPEATED VIOLATORS- A community care setting--

`(A) must disclose persons with an ownership or control int erest (including such persons as defined in section 1124(a)(3)) in the setting; and

`(B) may not have, as a person with an ownership or control interest in the setting, any individual or person who has been excluded from pa rticipation in the program under this title or who has had such an ownership or control interest in one or more community care settings which have been found re peatedly to be substandard or to have failed to meet the requirements of paragra ph (2).

`(i) SURVEY AND CERTIFICATION PROCESS-

`(1) CERTIFICATIONS-

`(A) RESPONSIBILITIES OF THE STATE- Under each State plan u nder this title, the State shall be responsible for certifying the compliance of providers of home and community care and community care settings with the appli cable requirements of subsections (f), (g) and (h). The failure of the Secretary to issue regulations to carry out this subsection shall not relieve a State of its responsibility under this subsection.

`(B) RESPONSIBILITIES OF THE SECRETARY- The Secretary shall be responsible for certifying the compliance of State providers of home and com munity care, and of State community care settings in which such care is provided , with the requirements of subsections (f), (g) and (h).

`(C) FREQUENCY OF CERTIFICATIONS- Certification of provider s and settings under this subsection shall occur no less frequently than once ev ery 12 months.

`(2) REVIEWS OF PROVIDERS-

`(A) IN GENERAL- The certification under this subsection wi th respect to a provider of home or community care must be based on a periodic r eview of the provider's performance in providing the care required under ICCP's in accordance with the requirements of subsection (f).

`(B) SPECIAL REVIEWS OF COMPLIANCE- Where the Secretary has reason to question the compliance of a provider of home or community care with any of the requirements of subsection (f), the Secretary may conduct a review of the provider and, on the basis of that review, make independent and binding det erminations concerning the extent to which the provider meets such requirements.

`(3) Surveys of community care settings-

`(A) IN GENERAL- The certification under this subsection wi th respect to community care settings must be based on a survey. Such survey for such a setting must be conducted without prior notice to the setting. Any indiv idual who notifies (or causes to be notified) a community care setting of the ti me or date on which such a survey is scheduled to be conducted is subject to a c ivil money penalty of not to exceed $2,000. The provisions of section 1128A (oth er than subsections (a) and (b)) shall apply to a civil money penalty under the previous sentence in the same manner as such provisions apply to a penalty or pr oceeding under section 1128A(a). The Secretary shall review each State's procedu res for scheduling and conducting such surveys to assure that the State has take n all reasonable steps to avoid giving notice of such a survey through the sched uling procedures and the conduct of the surveys themselves.

`(B) SURVEY PROTOCOL- Surveys under this paragraph shall be conducted based upon a protocol which the Secretary has provided for under subs ection (k).

`(C) PROHIBITION OF CONFLICT OF INTEREST IN SURVEY TEAM MEM BERSHIP- A State and the Secretary may not use as a member of a survey team unde r this paragraph an individual who is serving (or has served within the previous 2 years) as a member of the staff of, or as a consultant to, the community care setting being surveyed (or the person responsible for such setting) respecting compliance with the requirements of subsection (g) or (h) or who has a personal or familial financial interest in the setting being surveyed.

`(D) SPECIAL SURVEYS OF COMPLIANCE- Where the Secretary has reason to question the compliance of a community care setting with any of the r equirements of subsection (g) or (h), the Secretary may conduct a survey of the setting and, on the basis of that survey, make independent and binding determina tions concerning the extent to which the setting meets such requirements.

`(4) INVESTIGATION OF COMPLAINTS AND MONITORING OF PROVIDERS AN D SETTINGS- Each State and the Secretary shall maintain procedures and adequate staff to investigate complaints of violations of applicable requirements imposed on providers of community care or on community care settings under subsections (f), (g) and (h).

`(5) INVESTIGATION OF ALLEGATIONS OF INDIVIDUAL NEGLECT AND ABU SE AND MISAPPROPRIATION OF INDIVIDUAL PROPERTY- The State shall provide, through the agency responsible for surveys and certification of providers of home or co mmunity care and community care settings under this subsection, for a process fo r the receipt, review, and investigation of allegations of individual neglect an d abuse (including injuries of unknown source) by personnel providing such care or in such setting and of misappropriation of individual property by such person nel. Such process shall provide for documentation of findings relating to such a llegations with respect to an individual, for inclusion of any brief statement o f the individual disputing such findings, and for inclusion, in any disclosure o f such findings, of such brief statement (or of a clear and accurate summary the reof).

`(6) DISCLOSURE OF RESULTS OF INSPECTIONS AND ACTIVITIES-

`(A) PUBLIC INFORMATION- Each State, and the Secretary, sha ll make available to the public--

`(i) information respecting all surveys, reviews, and c ertifications made under this subsection respecting providers of home or communi ty care and community care settings, including statements of deficiencies,< /ul>

`(ii) copies of cost reports (if any) of such providers and settings filed under this title,

`(iii) copies of statements of ownership under section 1124, and

`(iv) information disclosed under section 1126.

`(B) NOTICES OF SUBSTANDARD CARE- If a State finds that--

`(i) a provider of home or community care has provided care of substandard quality with respect to an individual, the State shall make a reasonable effort to notify promptly (I) an immediate family member of each su ch individual and (II) individuals receiving home or community care from that pr ovider under this title, or

`(ii) a community care setting is substandard, the Stat e shall make a reasonable effort to notify promptly (I) individuals receiving co mmunity care in that setting, and (II) immediate family members of such individu als.

`(C) ACCESS TO FRAUD CONTROL UNITS- Each State shall provid e its State medicaid fraud and abuse control unit (established under section 190 3(q)) with access to all information of the State agency responsible for surveys , reviews, and certifications under this subsection.

`(j) ENFORCEMENT PROCESS FOR PROVIDERS OF COMMUNITY CARE-

`(1) STATE AUTHORITY-

`(A) IN GENERAL- If a State finds, on the basis of a review under subsection (i)(2) or otherwise, that a provider of home or community care no longer meets the requirements of this section, the State may terminate the p rovider's participation under the State plan and may provide in addition for a c ivil money penalty. Nothing in this subparagraph shall be construed as restricti ng the remedies available to a State to remedy a provider's deficiencies. If the State finds that a provider meets such requirements but, as of a previous perio d, did not meet such requirements, the State may provide for a civil money penal ty under paragraph (2)(A) for the period during which it finds that the provider was not in compliance with such requirements.

`(B) CIVIL MONEY PENALTY-

`(i) IN GENERAL- Each State shall establish by law (whe ther statute or regulation) at least the following remedy: A civil money penalty assessed and collected, with interest, for each day in which the provider is or was out of compliance with a requirement of this section. Funds collected by a State as a result of imposition of such a penalty (or as a result of the imposit ion by the State of a civil money penalty under subsection (i)(3)(A)) may be app lied to reimbursement of individuals for personal funds lost due to a failure of home or community care providers to meet the requirements of this section. The State also shall specify criteria, as to when and how this remedy is to be appli ed and the amounts of any penalties. Such criteria shall be designed so as to mi nimize the time between the identification of violations and final imposition of the penalties and shall provide for the imposition of incrementally more severe penalties for repeated or uncorrected deficiencies.

`(ii) DEADLINE AND GUIDANCE- Each State which elects to provide home and community care under this section must establish the civil mon ey penalty remedy described in clause (i) applicable to all providers of communi ty care covered under this section. The Secretary shall provide, through regulat ions or otherwise by not later than July 1, 1990, guidance to States in establis hing such remedy; but the failure of the Secretary to provide such guidance shal l not relieve a State of the responsibility for establishing such remedy.

`(2) SECRETARIAL AUTHORITY-

`(A) FOR STATE PROVIDERS- With respect to a State provider of home or community care, the Secretary shall have the authority and duties of a State under this subsection, except that the civil money penalty remedy descri bed in subparagraph (C) shall be substituted for the civil money remedy describe d in paragraph (1)(B)(i).

`(B) OTHER PROVIDERS- With respect to any other provider of home or community care in a State, if the Secretary finds that a provider no lo nger meets a requirement of this section, the Secretary may terminate the provid er's participation under the State plan and may provide, in addition, for a civi l money penalty under subparagraph (C). If the Secretary finds that a provider m eets such requirements but, as of a previous period, did not meet such requireme nts, the Secretary may provide for a civil money penalty under subparagraph (C) for the period during which the Secretary finds that the provider was not in com pliance with such requirements.

`(C) CIVIL MONEY PENALTY- If the Secretary finds on the bas is of a review under subsection (i)(2) or otherwise that a home or community car e provider no longer meets the requirements of this section, the Secretary shall impose a civil money penalty in an amount not to exceed $10,000 for each day of noncompliance. The provisions of section 1128A (other than subsections (a) and (b)) shall apply to a civil money penalty under the previous sentence in the sam e manner as such provisions apply to a penalty or proceeding under section 1128A (a). The Secretary shall specify criteria, as to when and how this remedy is to be applied and the amounts of any penalties. Such criteria shall be designed so as to minimize the time between the identification of violations and final impos ition of the penalties and shall provide for the imposition of incrementally mor e severe penalties for repeated or uncorrected deficiencies.

`(k) SECRETARIAL RESPONSIBILITIES-

`(1) PUBLICATION OF INTERIM REQUIREMENTS-

`(A) IN GENERAL- The Secretary shall publish, by December 1 , 1991, a proposed regulation that sets forth interim requirements, consistent w ith subparagraph (B), for the provision of home and community care and for commu nity care settings, including--

`(i) the requirements of subsection (c)(2) (relating to comprehensive functional assessments, including the use of assessment instrumen ts), of subsection (d)(2)(E) (relating to qualifications for qualified case mana gers), of subsection (f) (relating to minimum requirements for home and communit y care), of subsection (g) (relating to minimum requirements for small community care settings), and of subsection (h) (relating to minimum requirements for lar ge community care settings, and

`(ii) survey protocols (for use under subsection (i)(3) (A)) which relate to such requirements.

`(B) MINIMUM PROTECTIONS- Interim requirements under subpar agraph (A) and final requirements under paragraph (2) shall assure, through meth ods other than reliance on State licensure processes, that individuals receiving home and community care are protected from neglect, physical and sexual abuse, financial exploitation, inappropriate involuntary restraint, and the provision o f health care services by unqualified personnel in community care settings.

`(2) DEVELOPMENT OF FINAL REQUIREMENTS- The Secretary shall dev elop, by not later than October 1, 1992--

`(A) final requirements, consistent with paragraph (1)(B), respecting the provision of appropriate, quality home and community care and res pecting community care settings under this section, and including at least the r equirements referred to in paragraph (1)(A)(i), and

`(B) survey protocols and methods for evaluating and assuri ng the quality of community care settings.

The Secretary may, from time to time, revise such requirements, p rotocols, and methods.

`(3) NO DELEGATION TO STATES- The Secretary's authority under t his subsection shall not be delegated to States.

`(4) NO PREVENTION OF MORE STRINGENT REQUIREMENTS BY STATES- No thing in this section shall be construed as preventing States from imposing requ irements that are more stringent than the requirements published or developed by the Secretary under this subsection.

`(l) DEEMING AND WAIVER-

`(1) DEEMING- Area agencies on aging as defined in the Older Am ericans Act (Public Law 100-175) are considered public agencies for purposes of this section.

`(2) WAIVER-

`(A) States may waive the requirement that a nonpublic agen cy not provide home and community care or nursing facility services and do not h ave a direct or indirect ownership or control interest in, or direct or indirect affiliation or relationship with, an entity that provides, community care or nu rsing facilities for nonprofit agencies located in an area that is not an urbani zed area (as defined by the Bureau of the Census).

`(B) States may waive the requirement of section 1902(a)(1) (related to State wideness) for a program of home and community care under this section.

`(m) LIMITATION ON AMOUNT OF EXPENDITURES AS MEDICAL ASSISTANCE-

`(1) AUTHORIZATION- The amount of funds that may be expended as medical assistance to carry out the purposes of this section shall be for fisca l year 1991, $10,000,000, for fiscal year 1992, $20,000,000, for fiscal year 199 3, $40,000,000, for fiscal year 1994, $70,000,000, and for fiscal years thereaft er such sums as provided by Congress.

`(2) ALLOCATION OF FUNDS- The funds identified for each fiscal year (1991, 1992, 1993, 1994, and 1995) will be allocated to each State in the p roportion of the amount of Federal expenditures made available to the State for fiscal year 1989 (as reported on line 6 of the four quarterly form HCFA-64 expen diture reports) to the sum of Federal expenditures for all States, excluding the territories.'.

(c) PAYMENT FOR HOME AND COMMUNITY CARE-

(1) REASONABLE AND ADEQUATE PAYMENT RATES- Section 1902 (42 U.S .C. 1396a) is amended--

(A) in subsection (a)(13)--

(i) by striking `and' at the end of subparagraph (D),

(ii) by inserting `and' at the end of subparagraph (E), and

(iii) by adding at the end the following new subparagra ph:

`(F) for payment for home and community care (as defined in section 1929(a) and provided under such section) through rates which are reason able and adequate to meet the costs of providing care, efficiently and economica lly, in conformity with applicable State and Federal laws, regulations, and qual ity and safety standards;'; and

(B) in subsection (h), by adding before the period at the e nd the following: `or to limit the amount of payment that may be made under a pl an under this title for home and community care'.

(2) DENIAL OF PAYMENT FOR CIVIL MONEY PENALTIES, ETC- Section 1 903(i)(8) of such Act (42 U.S.C. 1396b(i)(8)) is amended by inserting `(A)' afte r `medical assistance' and by inserting before the semicolon at the end the foll owing: `or (B) for home and community care to reimburse (or otherwise compensate ) a provider of such care for payment of a civil money penalty imposed under thi s title or title XI or for legal expenses in defense of an exclusion or civil mo ney penalty under this title or title XI if there is no reasonable legal ground for the provider's case'.

(d) CONFORMING AMENDMENTS-

(1) Section 1902(j) (42 U.S.C. 1396a(j)) is amended by striking `(21)' and inserting `(22)'.

(2) Section 1902(a)(10)(C)(iv) (42 U.S.C. 1396a(a)(10)(C)(iv)) is amended by striking `through (20)' and inserting `through (21)'.

(e) EFFECTIVE DATES-

(1) Except as provided in this subsection, the amendments made by this section shall apply to home and community care furnished on or after Jul y 1, 1991, without regard to whether or not final regulations to carry out such amendments have been promulgated by such date.

(2)(A) The amendments made by subsection (c)(1) shall apply to home and community care furnished on or after July 1, 1991, or, if later, 30 day s after the date of publication of interim regulations under section 1929(k)(1).

(B) The amendment made by subsection (c)(2) shall apply to civi l money penalties imposed after the date of the enactment of this Act.

(f) WAIVER OF PAPERWORK REDUCTION, ETC- Chapter 35 of title 44, Uni ted States Code, and Executive Order 12291 shall not apply to information and re gulations required for purposes of carrying out this Act and implementing the am endments made by this Act.

SEC. 6242. COMMUNITY SUPPORTED LIVING ARRANGEMENTS SERVICES.

(a) PROVISION AS OPTIONAL SERVICE- Section 1905(a) (42 U.S.C. 1396d (a)) as amended by section 6211 (Home and Community Care) is further amended--

(1) by striking `and' at the end of paragraph (23);

(2) by redesignating paragraph (24) as paragraph (25); and

(3) by inserting after paragraph (23) the following new paragra ph:

`(24) community supported living arrangements services (to the extent allowed and as defined in section 1930).'.

(b) COMMUNITY SUPPORTED LIVING ARRANGEMENTS- Title XIX (42 U.S.C. 1 396 et seq.) as amended by section XXX (Home and Community Care) is furth er amended--

(1) by redesignating section 1930 as section 1931; and

(2) by inserting after section 1929 the following new section:

`COMMUNITY SUPPORTED LIVING ARRANGEMENTS SERVICES

`Sec. 1930. (a) COMMUNITY SUPPORTED LIVING ARRANGEMENTS SERVICES- I n this title, the term `community supported living arrangements services' means one or more of the following services provided in a State eligible to provide se rvices under this section (as defined in subsection (d)) to assist a development ally disabled individual (as defined in subsection (b)) in activities of daily l iving necessary to permit such individual to live in an integrated living enviro nment (as defined in subsection (c)) furnished in a community supported living a rrangement setting:

`(1) Personal assistance.

`(2) Training and habilitation services (necessary to assist th e individual in achieving increased integration, independence and productivity).

`(3) 24-hour emergency assistance (as defined by the Secretary) .

`(4) Assistive technology.

`(5) Adaptive equipment.

`(6) Other services (as approved by the Secretary, except those services described in subsection (g)).

`(b) DEVELOPMENTALLY DISABLED INDIVIDUAL DEFINED- In this title the term, `developmentally disabled individual' means an individual who as defined by the Secretary is described within the term `mental retardation and related co nditions' as defined in regulations as in effect on July 1, 1990, and who is res iding with the individual's family or legal guardian or in an integrated living environment (as defined in subsection (c)) in which no more than 3 other recipie nts of services under this section are residing and without regard to whether or not such individual is at risk of institutionalization (as defined by the Secre tary).

`(c) INTEGRATED LIVING ENVIRONMENT DEFINED- In this title the term `integrated living environment' means an environment located in a neighborhood w hich--

`(1) is representative of residential neighborhoods in the comm unity; and

`(2) is populated primarily by individuals other than a develop mentally disabled individual (as defined in this section).

`(d) CRITERIA FOR SELECTION OF PARTICIPATING STATES- The Secretary shall develop criteria to review the applications of States submitted under this section to provide community supported living arrangement services. The Secreta ry shall provide in such criteria that during the first 5 years of the provision of services under this section that no less than 4 and no more than 8 States sh all be allowed to receive Federal financial participation for providing the serv ices described in this section.

`(e) QUALITY ASSURANCE- A State selected by the Secretary to provid e services under this section shall in order to continue to receive Federal fina ncial participation for providing services under this section be required to est ablish and maintain a quality assurance program, that provides that--

`(1) the State will certify and survey providers of services un der this section (such surveys to be unannounced and average at least 1 a year);

`(2) the State will adopt standards for survey and certificatio n that include--

`(A) minimum qualifications and training requirements for p rovider staff;

`(B) financial operating standards; and

`(C) a consumer grievance process;

`(3) the State will provide a system that allows for monitoring boards consisting of providers, family members, consumers, and neighbors; and

`(4) the State will establish reporting procedures to make avai lable information to the public.

The Secretary shall not approve a quality assurance plan under this s ubsection and allow a State to continue to receive Federal financial participati on under this section unless the State provides for public hearings on the plan prior to adoption and implementation of its plan under this subsection.
`(f) MAINTENANCE OF EFFORT- States selected by the Secretary to rec eive Federal financial participation to provide services under this section shal l maintain current levels of spending for such services in order to be eligible to continue to receive Federal financial participation for the provision of such services under this section.

`(g) EXCLUDED SERVICES- No Federal financial participation shall be allowed for the provision of the following services under this section:
`(1) Room and board.

`(2) Cost of prevocational, vocational and supported employment .

`(h) WAIVER OF REQUIREMENTS- The Secretary may waive such provision s of this title as necessary to carry out the provisions of this section includi ng the following requirements of this title--

`(1) comparability of amount, duration, and scope of services;

`(2) statewideness; and

`(3) freedom of choice of providers.

`(i) TREATMENT OF FUNDS- Any funds expended under this section for medical assistance shall be in addition to funds expended for any existing servi ces covered under the State plan, including any waiver services for which an ind ividual receiving services under this program is already eligible.

`(j) LIMITATION ON AMOUNTS OF EXPENDITURES AS MEDICAL ASSISTANCE- T he amount of funds that may be expended as medical assistance to carry out the p urposes of this section shall be for fiscal year 1991, $5,000,000, for fiscal ye ar 1992, $10,000,000, for fiscal year 1993, $20,000,000, for fiscal year 1994, $ 35,000,000, and for fiscal years thereafter such sums as provided by Congress.'.

(c) EFFECTIVE DATE-

(1) IN GENERAL- The amendments made by this section shall apply to community supported living arrangements services furnished on or after July 1, 1991, without regard to whether or not final regulations to carry out such am endments have been promulgated by such date.

(2) APPLICATION PROCESS- The Secretary of Health and Human Serv ices shall provide that the applications required to be submitted by States unde r this section shall be received and approved prior to the effective date specif ied in paragraph (1).

SEC. 6243. MEDICAID COVERAGE OF PERSONAL CARE SERVICES OUTSIDE THE HO ME.

(a) IN GENERAL- Section 1905(a)(7) (42 U.S.C. 1396d(a)(7)) is amend ed by striking `services' and inserting `services including personal care servic es (A) prescribed by a physician for an individual in accordance with a plan of treatment, (B) provided by an individual who is qualified to provide such servic es and who is not a member of the individual's family, (C) supervised by a regis tered nurse, and (D) furnished in a home or other location; but not including su ch services furnished to an inpatient or resident of a nursing facility, such as adult day care settings or congregate living arrangements'.

(b) EFFECTIVE DATE- The amendment made by this section shall become effective with respect to home health care services provided on or after Januar y 1, 1991 and shall expire with respect and services provided on or after Decemb er 31, 1993.

PART VI--NURSING HOME REFORM

SEC. 6251. MEDICAID NURSING HOME REFORM PROVISIONS.

(a) NURSE AIDE TRAINING AMENDMENTS-

(1) NO COMPLIANCE ACTIONS BEFORE EFFECTIVE DATE OF FINAL REGULA TIONS- The Secretary of Health and Human Services (hereafter in this section ref erred to as the `Secretary') shall not take (and shall not continue) any action against a State under section 1904 of the Social Security Act on the basis of th e State's failure to meet the requirement of section 1919(e)(1)(A) of such Act b efore the effective date of final regulations, issued by the Secretary, establis hing requirements under section 1919(f)(2)(A)(ii)(I) of such Act, if the State d emonstrates to the satisfaction of the Secretary that it has made a good faith e ffort to meet such requirement before such effective date.

(2) PART-TIME NURSE AIDES NOT ALLOWED DELAY IN TRAINING- Sectio n 1919(b)(5)(A) (42 U.S.C. 1396r(b)(5)(A)) is amended--

(A) by striking `, temporary, per diem, or other';

(B) by inserting `(i)' after `(A)';

(C) by redesignating clauses `(i)' and `(ii)' as subclauses `(I)' and `(II)' respectively; and

(D) by adding at the end the following:

`(ii) EXCEPTION- A nursing facility must not use on a t emporary, per diem, or on any other than a full-time basis any individual as a n urse aide in the facility on or after January 1, 1991, unless the individual mee ts the requirements described in clause (i) (I) and (II).'.
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(3) EXTENSION OF ENHANCED MATCH RATE UNTIL OCTOBER 1, 1990- Sec tion 1903(a)(2)(B) (42 U.S.C. 1396b(a)(2)(B)) is amended by striking `July 1, 19 90' and inserting `October 1, 1990'.

(4) CLARIFICATION OF PERMISSIBLE CHARGES FOR TRAINING OF AIDES NOT YET EMPLOYED BY A FACILITY- Section 1919(f)(2)(A)(iv)(II) (42 U.S.C. 1396r(f )(2)(A)(iv)(II)) is amended by striking `such program' and inserting `such progr am, except that an accredited, nonfacility based program may impose such charges on individuals who are not presently employed by a nursing facility or who have not yet had an offer for future employment at such a facility'.

(5) REIMBURSEMENT TO CERTAIN INDIVIDUALS TRAINED PRIOR TO EMPLO YMENT- Add to section 1919(f)(2)(A)(iv) a new subclause (III) as follows:

`(III) For individuals employed or under contract for emplo yment as a nurse aide within 12 months after successful completion of a nonfacil ity-based, State-approved nurse aide training and competency evaluation program, the State must ensure that the costs incurred by such individuals for such prog rams are reimbursed to such individuals.

(6) CLARIFICATION OF STATE RESPONSIBILITY TO DETERMINE COMPETEN CY- Section 1919(f)(2)(B) (42 U.S.C. 1396r(f)(2)(B)) is amended, in the second s entence, by inserting `(through subcontract or otherwise)' after `may not delega te'.

(7) NURSE AIDE REGISTRY-

(A) IN GENERAL- Section 1919(b)(5)(C) (42 U.S.C. 1396r(b)(5 )(C)) is amended by adding at the end the following new sentence: `In the case o f an individual who a nursing facility is considering employing as a nurse aide and who the facility has reason to believe is from a State other than the State in which the facility is located, such a facility shall not use such an individu al as a nurse aide unless the facility has inquired concerning such individual o f the State registry established under subsection (e)(2)(A) of the State from wh ich such facility has reason to believe such individual resided'.

(B) DEEMED AIDES TO BE INCLUDED ON REGISTRY- Section 1919(e )(2)(A) (42 U.S.C. 1396r(e)(2)(A)) is amended by striking `individuals' and inse rting `individuals (including those individuals deemed under section 6901(b)(4) (B), (C), and (D) of the Omnibus Budget Reconciliation Act of 1989 to have satis fied the training and competency evaluation program requirements under this sect ion)'.

(8) RETRAINING OF NURSE AIDES NOT EMPLOYED- Section 1919(b)(5)( D) (42 U.S.C. 1396r(b)(5)(D)) is amended by striking the period and inserting th e following `, or a new competency evaluation program.'.

(9) FACILITIES INELIGIBLE TO OFFER TRAINING PROGRAMS- Section 1 919(f)(2) (42 U.S.C. 1396(f)(2)) is amended--

(A) in subparagraph (B)(iii), by amending subclause (I) to read as follows:

`(I) offered by or in a nursing facility described in subparagraph (C), or'; and

(B) by adding after subparagraph (B) the following new subparag raph:

`(C) NURSING FACILITIES INELIGIBLE TO OFFER PROGRAMS- A nur sing facility shall be ineligible to offer a program under this paragraph--

`(i) if at any time on or after October 1, 1988, the St ate agency or the Secretary terminated or terminates the facility's provider agr eement under this title or title XVIII, until after the end of a period of at le ast two years following reinstatement, during which period--

`(I) no survey or investigation finds any deficienc ies warranting termination, and

`(II) at least one standard survey is conducted pur suant to subsection (g); or

`(ii) if the facility--

`(I) received a notice of termination of its provid er agreement under this title or title XVIII from the State agency or the Secret ary at any time during the one-year period ending September 30, 1990, or

`(II) is found, pursuant to a standard survey or in vestigation under subsection (g) or section 1819(g), to have deficiencies result ing in a civil money penalty in excess of $5,000, denial of payment, or appointm ent of temporary management pursuant to subsection (h)(2)(A) or to section 1819( h)(2)(B),

until after the completion of a subsequent standard surve y under subsection (g) which finds no such deficiencies.'.

(b) PREADMISSION SCREENING AND RESIDENT REVIEW-

(1) NO DELEGATION OF AUTHORITY TO CONDUCT SCREENING AND REVIEWS - Section 1919 (42 U.S.C. 1396r) is amended--

(A) in subsection (b)(3)(f), by adding at the end the follo wing:

`A State mental health authority and a State mental retardation o r developmental disability authority may not delegate (by subcontract or otherwi se) their responsibilities under this subparagraph to a nursing facility (or to an entity that has a direct or indirect affiliation or relationship with such a facility).'; and

(B) in subsection (e)(7)(B), by adding at the end the follo wing new clause:

`(iv) PROHIBITION OF DELEGATION- A State mental health authority, a State mental retardation or developmental disability authority, and a State may not delegate (by subcontract or otherwise) their responsibilities u nder this subparagraph to a nursing facility (or to an entity that has a direct or indirect affiliation or relationship with such a facility).'.
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(2) NO COMPLIANCE ACTIONS BEFORE EFFECTIVE DATE OF FINAL REGULA TIONS- The Secretary shall not take (and shall not continue) any action against a State under section 1904 or section 1919(e)(7)(D) of the Social Security act o n the basis of the State's failure to meet the requirement of section 1919(e)(7) (A) of such Act before the effective date of final regulations, issued by the Se cretary, establishing minimum criteria under section 1919(f)(8)(A) of such Act, if the State demonstrates to the satisfaction of the Secretary that it has made a good faith effort to meet such requirement before such effective date.

(3) REVISION OF ALTERNATIVE DISPOSITION PLANS- Section 1919(e)( 7)(E) (42 U.S.C. 1396r(e)(7)(E)) is amended by adding at the end the following: `The State may revise such an agreement, subject to the approval of the Secretar y, before April 1, 1991, but only if, under the revised agreement, all residents subject to the agreement who do not require the level of services of such a fac ility are discharged from the facility by not later than April 1, 1994'.

(4)(A) STATE REPORTS REQUIRED- Section 1919(e)(7)(C) (42 U.S.C. 1396r(e)(7)(C)) is amended by adding at the end the following new clause:< /ul>

`(iv) ANNUAL REPORT- Each State shall report to the Sec retary annually concerning the number and disposition of residents described in each of clauses (ii) and (iii).'.

(B) SUMMARY OF REPORTS- Section 4215 of the Omnibus Budget Reco nciliation Act of 1987 is amended by adding at the end the following new sentenc e: `Each such report shall also include a summary of the information reported by States under section 1919(e)(7)(C)(iv) of such Act'.

(5) DEFINITION OF MENTALLY ILL- Section 1919(e)(7)(G)(i) (42 U. S.C. 1396r(e)(7)(G)(i)) is amended--

(A) by striking `primary or secondary' and all that follows through `3rd edition)' and inserting `serious mental illness (as defined by the Secretary in consultation with the National Institute of Mental Health)',< /ul>

(B) by inserting before the period `or a diagnosis (other t han a primary diagnosis) of dementia and a primary diagnosis that is not a serio us mental illness'.

(6) SUBSTITUTION OF `SPECIALIZED SERVICES' FOR `ACTIVE TREATMEN T'- Sections 1919(b)(3)(F) and 1919(e)(7) (42 U.S.C. 1396r(b)(3)(F), 1396r(e)(7) ) are each amended by striking `active treatment' and `ACTIVE TREATMENT' each pl ace either appears and inserting `specialized services' and `SPECIALIZED SERVICE S', respectively.

(7) CLARIFICATION WITH RESPECT TO ADMISSIONS AND READMISSION FR OM A HOSPITAL- Section 1919 (42 U.S.C. 1396r) is amended--

(A) in subsection (b)(3)(F), by striking `A nursing facilit y' and by inserting `Except as provided in clauses (ii) and (iii) of subsection (e)(7)(A), a nursing facility'; and

(B) in subsection (e)(7)(A)--

(i) by redesignating the first 2 sentences as clause (i ) with the following heading (and appropriate indentation):
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`(i) IN GENERAL- ', and

(ii) by adding at the end the following:

`(ii) CLARIFICATION WITH RESPECT TO CERTAIN READMISSIONS- T he preadmission screening program under clause (i) need not provide for determin ations in the case of the readmission to a nursing facility of an individual who , after being admitted to the nursing facility, was transferred for care in a ho spital.

`(iii) EXCEPTION FOR CERTAIN HOSPITAL DISCHARGES- The pread mission screening program under clause (i) shall not apply to the admission to a nursing facility of an individual--

`(I) who is admitted to the facility directly from a ho spital after receiving acute inpatient care at the hospital,

`(II) who requires nursing facility services for the co ndition for which the individual received care in the hospital, and

`(III) whose attending physician has certified, before admission to the facility, that the individual is likely to require less than 30 days of nursing facility services.'.

(c) FACILITY STAFFING-

(1) STANDARDS FOR CERTAIN PROFESSIONAL SERVICES- The Secretary shall conduct a study on the hiring and dismissal practices if nursing facilitie s with respect to social workers, dieticians, activities professionals, and medi cal records practitioners, and report to Congress by January 1, 1993, on whether facilities have on their staffs, persons with significantly different credentia ls as a result of new regulations that became effective October 1, 1990, and the impact of staff composition on quality of care.

(2) ADDITIONAL REQUIREMENTS WITH RESPECT TO MEDICAID NURSE STAF FING WAIVERS- Section 1919(b)(4)(C)(ii) (42 U.S.C. 1369r(b)(4)(C)(ii)) is amende d--

(A) by striking `and' at the end of subclause (II);

(B) by striking the period at the end of subclause (III) an d by inserting in lieu thereof a comma; and

(C) by adding at the end thereof the following new subclaus es:

`(IV) the State agency granting a waiver of such re quirement provide notice of the waiver to the appropriate State and substate lon g-term care ombudsman, to the protection and advocacy system and other appropria te State and private agencies; and

`(V) a nursing facility that is granted such a waiv er by a State is required to make reasonable efforts to notify present and prosp ective residents of the facility (or a guardian or legal representative of such residents) of the waiver.'.

(3) STUDY ON STAFFING REQUIREMENTS IN NURSING FACILITIES- The S ecretary shall conduct a study and report to Congress no later than January 1, 1 992, on the appropriateness of establishing minimum caregiver to resident ratios and minimum supervisor to caregiver ratios for nursing facilities receiving pay ments under a State plan under title XIX of the Social Security Act. If the Secr etary determines that the establishment of such minimum ratios is advisable, the Secretary shall specify in the report provided for in this subsection appropria te ratios or standards.

(d) MISCELLANEOUS-

(1) DELAY IN REQUIREMENT FOR REMEDIES- Section 1919(h)(2)(B)(i) (42 U.S.C. 1396r(h)(2)(B)(i) is amended by striking `October 1, 1989' and inser ting `April 1, 1991'.

(2) RESIDENT ACCESS TO CLINICAL RECORDS- Section 1919(c)(1)(A)( iv) (42 U.S.C. 1396r(c)(1)(A)(iv)) is amended by inserting before the period at the end the following: `and access to current clinical records of the resident p romptly upon reasonable request (as defined by the Secretary) by the resident or resident's legal representative'.

(3) OMBUDSMAN PROGRAM COORDINATION WITH STATE MEDICAID AND SURV EY AND CERTIFICATION AGENCIES- Section 1919(g)(5)(B) (42 U.S.C. 1396r(g)(5)(B)) deleted and replaced with:

`(B) NOTICE TO OMBUDSMAN- Each State agency with an agreeme nt with the Secretary under this section shall enter into a written agreement wi th the Office of the State Long-Term Care Ombudsman (as defined by the Older Ame ricans Act), to provide for information exchange, case referral, and prompt noti fication of the office of any adverse action to be taken against a nursing facil ity.'.

(4) PERIOD FOR RESIDENT ASSESSMENT- Section 1919(b)(3)(C)(i)(I) (42 U.S.C. 1396r(b)(3)(C)(i)(I) is amended by striking `4 days' and inserting ` 14 days'.

(e) EFFECTIVE DATES- (1) Except as provided in paragraphs (2) and ( 3), the amendments made by this section are effective on April 1, 1991.

(2) Paragraphs (1), (3), and (9) of subsection (a); paragraphs (2), (3), and (7) of subsection (b); paragraph (2) of subsection (c); and paragraphs (1) and (4) of subsection (d) are effective as if included in the Omnibus Budge t Reconciliation Act of 1987.

(3) Subsections (b)(4), (c)(1), and (c)(3) are effective upon enact ment.

PART VII--MISCELLANEOUS AND TECHNICAL PROVISIONS

SEC. 6261. DEMONSTRATION PROJECTS TO STUDY THE EFFECT OF ALLOWING STA TES TO EXTEND MEDICAID COVERAGE TO CERTAIN LOW-INCOME FAMILIES NOT OTHERWISE QUA LIFIED TO RECEIVE MEDICAID BENEFITS.

(a) DEMONSTRATION PROJECTS-

(1) IN GENERAL- (A) The Secretary of Health and Human Services (hereafter in this section referred to as the `Secretary') shall enter into agre ements with at least 3 and no more than 4 States for the purpose of conducting d emonstration projects to study the effect on access to, and costs of, health car e of eliminating the categorical eligibility requirement for medicaid benefits f or certain low-income individuals.

(B) In entering into agreements with States under this section the Secretary shall provide that at least 1 and no more than 2 of the projects a re conducted on a substate basis, and that such projects target areas which cont ain a high percentage of racial or ethnic minorities.

(2) REQUIREMENTS- (A) The Secretary may not enter into an agree ment with a State to conduct a project unless the Secretary determines that--

(i) the project can reasonably be expected to improve acces s to health insurance coverage for the uninsured;

(ii) with respect to projects for which the statewideness r equirement has not been waived, the State provides, under its plan under title X IX of the Social Security Act, for eligibility for medical assistance for all in dividuals described in subparagraphs (A), (B), (C), and (D) of paragraph (1) of section 1902(l) of such Act (based on the State's election of certain eligibilit y options the highest income standards and, based on the State's waiver of the a pplication of any resource standard);

(iii) eligibility for benefits under the project is limited to individuals in families with income below 150 percent of the income official poverty line;

(iv) if the Secretary determines that it is cost-effective for the project to utilize employer coverage (as described in section 1925(b)(4) (D) of the Social Security Act), the project must require an employer contributi on and benefits under the State plan under title XIX of such Act will continue t o be made available to the extent they are not available under the employer cove rage;

(v) the project provides for coverage of benefits consisten t with subsection (b); and

(vi) the project only imposes premiums, coinsurance, and ot her cost-sharing consistent with subsection (c).

(B) The Secretary may waive the requirements of clause (ii) of this paragraph with respect to those projects described in subparagraph (B) of p aragraph (1).

(3) PERMISSIBLE RESTRICTIONS- A project may limit eligibility t o individuals whose assets are valued below a level specified by the State. For this purpose, any evaluation of such assets shall be made in a manner consistent with the standards for valuation of assets under the State plan under title XIX of the Social Security Act for individuals entitled to assistance under part A of title IV of such Act. Nothing in this section shall be construed as requiring a State to provide for eligibility for individuals for months before the month in which such eligibility is first established.

(4) EXTENSION OF ELIGIBILITY- A project may provide for extensi on of eligibility for medical assistance for individuals covered under the proje ct in a manner similar to that provided under section 1925 of the Social Securit y Act to certain families receiving aid pursuant to a plan of the State approved under part A of title IV of such Act.

(5) WAIVER OF REQUIREMENTS-

(A) IN GENERAL- Subject to subparagraph (B), the Secretary may waive such requirements of title XIX of the Social Security Act as may be re quired to provide for additional coverage of individuals under projects under th is section.

(B) NONWAIVABLE PROVISIONS- Except with respect to those pr ojects described in subparagraph (B) of paragraph (1), the Secretary may not wai ve, under subparagraph (A), the statewideness requirement of section 1902(a)(1) of the Social Security Act or the Federal medical assistance percentage specifie d in section 1905(b) of such Act.

(b) BENEFITS-

(1) IN GENERAL- Except as provided in this subsection, the amou nt, duration, and scope of medical assistance made available under a project sha ll be the same as the amount, duration, and scope of such assistance made availa ble to individuals entitled to medical assistance under the State plan under sec tion 1902(a)(10)(A)(i) of the Social Security Act.

(2) LIMITS ON BENEFITS-

(A) REQUIRED- Except with respect to those projects describ ed in subparagraph (B) of paragraph (1), no medical assistance shall be made ava ilable under a project for nursing facility services or community-based long-ter m care services (as defined by the Secretary) or for pregnancy-related services. No medical assistance shall be made available under a project to individuals co nfined to a State correctional facility, county jail, local or county detention center, or other State institution.

(B) PERMISSIBLE- A State, with the approval of the Secretar y, may limit or otherwise deny eligibility for medical assistance under the proj ect and may limit coverage of items and services under the project, other than e arly and periodic screening, diagnostic, and treatment services for children und er 18 years of age.

(3) USE OF UTILIZATION CONTROLS- Nothing in this subsection sha ll be construed as limiting a State's authority to impose controls over utilizat ion of services, including preadmission requirements, managed care provisions, u se of preferred providers, and use of second opinions before surgical procedures .

(c) PREMIUMS AND COST-SHARING-

(1) NONE FOR THOSE WITH INCOME BELOW THE POVERTY LINE- Under a project, there shall be no premiums, coinsurance, or other cost-sharing for indi viduals whose family income level does not exceed 100 percent of the income offi cial poverty line (as defined in subsection (g)(1)) applicable to a family of th e size involved.

(2) LIMIT FOR THOSE WITH INCOME ABOVE THE POVERTY LINE- Under a project, for individuals whose family income level exceeds 100 percent, but is less than 150 percent, of the income official poverty line applicable to a famil y of the size involved, the monthly average amount of premiums, coinsurance, and other cost-sharing for covered items and services shall not exceed 3 percent of the family's average gross monthly earnings.

(3) INCOME DETERMINATION- Each project shall provide for determ inations of income in a manner consistent with the methodology used for determin ations of income under title XIX of the Social Security Act for individuals enti tled to benefits under part A of title IV of such Act.

(d) DURATION- Each project under this section shall commence not la ter than July 1, 1991 and shall be conducted for a 3-year period; except that th e Secretary may terminate such a project if the Secretary determines that the pr oject is not in substantial compliance with the requirements of this section.

(e) LIMITS ON EXPENDITURES AND FUNDING-

(1) IN GENERAL- (A) The Secretary in conducting projects shall limit the total amount of the Federal share of benefits paid and expenses incurr ed under title XIX of the Social Security Act to no more than $12,000,000 in eac h of fiscal years 1991, 1992, and 1993, and to no more than $4,000,000 in fiscal year 1994.

(B) Of the amounts appropriated under subparagraph (A), the Sec retary shall provide that no more than one-third of such amounts shall be used t o carry out the projects described in paragraph (1)(B) of subsection (a) (for wh ich the statewideness requirement has been waived).

(2) NO FUNDING OF CURRENT BENEFICIARIES- No funding shall be av ailable under a project with respect to medical assistance provided to individua ls who are otherwise eligible for medical assistance under the plan without rega rd to the project.

(3) NO INCREASE IN FEDERAL MEDICAL ASSISTANCE PERCENTAGE- Payme nts to a State under a project with respect to expenditures made for medical ass istance made available under the project may not exceed the Federal medical assi stance percentage (as defined in section 1905(b) of the Social Security Act) of such expenditures.

(f) EVALUATION AND REPORT-

(1) EVALUATIONS- For each project the Secretary shall provide f or an evaluation to determine the effect of the project with respect to--

(A) access to, and costs of, health care,

(B) private health care insurance coverage, and

(C) premiums and cost-sharing.

(2) REPORTS- The Secretary shall prepare and submit to Congress an interim report on the status of the projects not later than January 1, 1993, and a final report containing such summary together with such further recommend ations as the Secretary may determine appropriate not later than January 1, 1995 .

(g) DEFINITIONS- In this section:

(1) The term `income official poverty line' means such line as defined by the Office of Management and Budget and revised annually in accordanc e with section 673(2) of the Omnibus Budget Reconciliation Act of 1981.

(2) The term `project' refers to a demonstration project under subsection (a).

SEC. 6262. MEDICAID RESPITE DEMONSTRATION PROJECT EXTENDED.

Section 9414 of the Omnibus Budget Reconciliation Act of 1986 is am ended--

(1) by amending subsection (e) to read as follows:

`(e) DURATION- The project under this section may continue until Se ptember 30, 1992.'; and

(2) in subsection (d), by striking the last sentence and insert ing in lieu thereof the following new sentence: `For the period beginning Octobe r 1, 1990, and ending September 30, 1992, Federal payments for the project shall not exceed amounts expended under the project in the preceding fiscal year.'.

SEC. 6263. DEMONSTRATION PROJECT TO PROVIDE MEDICAID COVERAGE FOR HIV -POSITIVE INDIVIDUALS, AND CERTAIN PREGNANT WOMEN DETERMINED TO BE AT RISK OF CO NTRACTING THE HIV VIRUS.

(a) IN GENERAL- Not later than 3 months after the date of the enact ment of this Act, the Secretary of Health and Human Services (hereafter in this section referred to as the `Secretary') shall provide for 2 demonstration proje cts to be administered by States that submit an application under this section, through programs administered by the States under title XIX of the Social Securi ty Act. Such demonstration projects shall provide coverage for the services desc ribed in subsection (c) to individuals--

(1) whose income and resources do not exceed the maximum allowa ble amount for eligibility for any individual in any category of disability unde r the State plan under section 1902 of the Social Security Act, and who have tes ted positive for the presence of HIV virus (without regard to the presence of an y symptoms of AIDS or opportunistic diseases related to AIDS); or

(2) who are pregnant women with multiple medical and psychosoci al needs who have not attained the age of 19, and are determined to be at risk o f HIV infection because of substance abuse.

(b) SERVICES AVAILABLE UNDER A DEMONSTRATION PROJECT- (1) The medic al assistance made available to individuals described in section 1902(a)(10)(A) of the Social Security Act shall be made available to individuals described in s ubsection (a) who receive services under a demonstration project under such para graph.

(2) A demonstration project under subsection (a) shall provide serv ices in addition to the services described in paragraph (1) which shall be limit ed only on the basis of medical necessity or the appropriateness of such service s. To the extent not provided as described in paragraph (1), such additional ser vices shall include--

(A) general and preventative medical care services (including i npatient, outpatient, residential and hospice care);

(B) prescription drugs, including drugs for the purposes of pre ventative health care services;

(C) counseling and social services;

(D) substance abuse treatment services (including services for multiple substances abusers);

(E) home care services (including assistance in carrying out ac tivities of daily living);

(F) case management;

(G) health education services;

(H) respite care for caregivers; and

(I) dental services.

(c) AGREEMENT WITH STATES- (1) Each State conducting a demonstratio n project under subsection (a) shall enter into an agreement with hospitals subm itting applications to the State, whereby the State shall agree to pay each such hospital for the services provided under subsection (b) and not later than 12 m onths after the commencement of a demonstration project, institute a system of m onthly payment to each such hospital based on the average per capita cost of the services described in subsection (c) provided to individuals described in parag raphs (1) and (2) of subsection (a).

(2) A demonstration project described in subsection (a) shall be li mited to an enrollment of not more than 200 individuals.

(3) A demonstration project conducted under subsection (a) shall co mmence not later than 9 months after the date of the enactment of this Act and s hall terminate on the date that is 3 years after the date of commencement.< /ul>
(d) FEDERAL SHARE OF COSTS- The Federal share of the cost of servic es described in paragraph (3) furnished under a demonstration project conducted under paragraph (1) shall be determined by the otherwise applicable Federal matc hing assistance percentage pursuant to section 1905(b) of the Social Security Ac t.

(e) WAIVER OF REQUIREMENTS OF THE SOCIAL SECURITY ACT- The Secretar y may waive such requirements of the Social Security Act as the Secretary determ ines to be necessary to carry out the purposes of this section.

SEC. 6264. MENTAL HEALTH FACILITY CERTIFICATION DEMONSTRATION PROJECT .

(a) The Secretary of Health and Human Services (hereafter in this s ection referred to as the `Secretary') shall establish, in consultation with the Council on Accreditation of Services for Families and Children, the Joint Commi ssion on Accreditation of Healthcare Organizations, the Commission on Accreditat ion of Rehabilitation Facilities, the Association of Health Facilities Licensure and Certification Directors, the National Governors Association, the National A ssociation of State Mental Health Program Directors, Protection and Advocacy Sys tems, organizations representing consumers and recipients of services under titl e XIX of the Social Security Act, and other interested parties, criteria for aut horizing accrediting bodies to determine facility compliance with standards esta blished or authorized under this title and conduct a 5-State, 3-year demonstrati on program in which certification to participate in the program may be granted t o mental health facilities, as defined in subsection (e), based upon a finding b y such accrediting bodies that a mental health facility is in compliance with st andards established or authorized under title XIX of the Social Security Act.

(b)(1) Prior to initiating such demonstration program, the Secretar y shall establish such criteria that ensure, at a minimum, that--

(A) in addition to routine accreditation reviews, there are ann ual unannounced visits to evaluate continued compliance with accreditation stand ards, and such accrediting body shall submit its report to appropriate Governmen t agencies;

(B) the public and State licensure and certification officials have prompt access to all documents describing the findings of inspection by acc reditation teams and confidential information pertaining to client or patient na mes has been deleted prior to release of these documents;

(C) health and safety deficiencies shall be fully documented an d reported to State licensure and certification authorities immediately upon bei ng discovered;

(D) complaints filed by recipients of covered services, their a dvocates, or the general public that may affect continued compliance with accred itation standards shall be investigated promptly by the accrediting body;

(E) complaints not related to accreditation standards and all c omplaints related to health and safety shall be reported to the appropriate Stat e and local authorities in a timely manner;

(F) any changes in a facility's accreditation status shall be r eported to State licensure and certification officials; and

(G) periodic unannounced inspections by State licensing and cer tification officials take place to evaluate compliance with conditions of partic ipation in this title.

(2) The Secretary shall, in developing criteria, also address types of standards, reporting requirements, duration of accreditation, and other cons iderations.

(c) The Secretary shall publish proposed criteria developed pursuan t to subsection (b) in the Federal Register not later than 9 months from the dat e of enactment of this section, and shall provide not more than 90 days for publ ic comment on the proposed criteria.

(d) Not later than 180 days prior to termination of the demonstrati on program established in subsection (a), the Secretary shall submit a report to the Committee on Finance of the Senate evaluating the accreditation process, in cluding--

(1) the extent to which--

(A) accrediting bodies and facilities have participated in the program;

(B) facilities have complied with standards;

(C) there has been an impact on care and access to services ; and

(D) problems with, and prospects for, collaboration between accreditation bodies and State survey and certification officials where quality problems have been documented, and with respect to facilities where complaints have been filed by consumers or their advocates; and

(2) such recommendations as the Secretary deems appropriate.

(e) The term `mental health facilities', or `facility' shall mean f or purposes of this demonstrative project only, a facility or part of a facility which provides, in an organized setting, outpatient mental health services, out patient substance abuse and alcoholism services, residential treatment services for children, or day treatment services for children.

SEC. 6265. OPTIONAL STATE MEDICAID DISABILITY DETERMINATIONS INDEPEND ENT OF THE SOCIAL SECURITY ADMINISTRATION.

(a) IN GENERAL- Section 1902 (42 U.S.C. 1396a) as amended by sectio n 6201 is further amended by adding at the end the following new subsection:

`(t)(1) A State plan may provide for the making of determinations o f disability or blindness for the purpose of determining eligibility for medical assistance under the State plan by the single State agency or its designee, and make medical assistance available to individuals whom it finds to be blind or d isabled and who are determined otherwise eligible for such assistance during the period of time prior to which a final determination of disability or blindness is made by the Social Security Administration with respect to such an individual . In making such determinations, the State must apply the definitions of disabil ity and blindness found in section 1614(a) of the Social Security Act.'.
(b) STUDY OF MEDICAID DISABILITY DEFINITION- (1) The General Accoun ting Office shall conduct a study of the appropriateness of the use of the defin ition of disability and blindness (including the durational requirement) found i n section 1614(a) of the Social Security Act for purposes of eligibility for med ical assistance under title XIX of the Social Security Act.

(2) By no later than January 1, 1992, the GAO shall submit a report to Congress and to the Secretary of Health and Human Services on its study and shall include its recommendations, if any.

SEC. 6266. MEDICALLY NEEDY INCOME LEVELS FOR CERTAIN MEMBER FAMILIES .

(a) IN GENERAL- For purposes of section 1903(f)(1)(B) of the Social Security Act, for payments made before, on, or after the date of the enactment of this Act, a State described in subparagraph (B) may use, in determining the ` highest amount which would ordinarily be paid to a family of the same size' (und er the State's plan approved under part A of title IV of such Act) in the case o f a family consisting only of one individual and without regard to whether or no t such plan provides for aid to families consisting only of one individual, an a mount reasonably related to the highest money payment which would ordinarily be made under such a plan to a family of two without income or resources.

(b) STATES COVERED- Subparagraph (A) shall only apply to a State th e State plan of which (under title XIX of the Social Security Act) as of June 1, 1989, provided for the policy described in such subparagraph. For purposes of t he previous sentence, a State plan includes all the matter included in a State p lan under section 2373(c)(5) of the Deficit Reduction Act of 1984 (as amended by section 9 of the Medicare and Medicaid Patient and Program Protection Act of 19 87).

SEC. 6267. MEDICAID SPENDDOWN OPTION.

Section 1903(f)(2) (42 U.S.C. 1396b(f)(2)) is amended by--

(1) inserting `(A)' after `(2)'; and

(2) by adding before the period at the end the following: `or, (B) at State option, an amount paid by such family, at the family's option, to t he State, provided that the amount, when combined with prior months' incurred bi lls, is sufficient to meet the applicable income limitation described in paragra ph (1). The amount of State expenditures for which Federal medical assistance pa yments is available under subsection (a)(1) will be reduced by amounts collected pursuant to this subparagraph.'

SEC. 6268. LIMITATION ON DISALLOWANCES OR DEFERRAL OF FEDERAL FINANCI AL PARTICIPATION FOR CERTAIN INPATIENT PSYCHIATRIC HOSPITAL SERVICES FOR INDIVID UALS UNDER AGE 21.

(a) IN GENERAL- (1) If the Secretary of Health and Human Services m akes a determination that a psychiatric facility has failed to comply with certi fication of need requirements for inpatient psychiatric hospital services for in dividuals under age 21 pursuant to section 1905(h) of the Social Security Act, a nd such determination has not been subject to a final judicial decision, any dis allowance or deferral of Federal financial participation under such Act based on such determination shall only apply to the period of time beginning with the fi rst day of noncompliance and ending with the date by which the psychiatric facil ity develops documentation (using plan of care or utilization review procedures) of the need for inpatient care with respect to such individuals.

(2) Any disallowance of Federal financial participation under title XIX of the Social Security Act relating to the failure of a psychiatric facilit y to comply with certification of need requirements--

(A) shall not exceed 25 percent of the amount of Federal financ ial participation for the period described in paragraph (1); and

(B) shall not apply to any fiscal year before the fiscal year t hat is 3 years before the fiscal year in which the determination of noncomplianc e described in paragraph (1) is made.

(b) EFFECTIVE DATE- Subsection (a) shall apply to disallowance acti ons that are pending or for which there has not been a final judicial decision a s of the date of the enactment of this Act.

SEC. 6269. 5-YEAR EXTENSION OF CERTAIN WAIVER.

(a) IN GENERAL- Section 507 of the Family Support Act of 1988 is am ended by striking `1991' and inserting `1996'.

(b) CONFORMING AMENDMENT- Section 1903(m)(6)(A) (42 U.S.C. 1396b(m) (6)(A)) is amended by striking `State of New Jersey' and inserting `States of Ne w Jersey and Minnesota'.

SEC. 6270. MEDICAID LONG-TERM CARE INSURANCE DEMONSTRATION PROJECT.

(a) IN GENERAL- The Secretary of Health and Human Services (hereaft er in this section referred to as the `Secretary') shall provide for a demonstra tion project in the States of Indiana, Illinois, Wisconsin, Oregon, California, Connecticut, Massachusetts, Missouri, New York, and New Jersey. Such project sha ll allow individuals with income and resources above eligibility levels for rec eipt of medical assistance under title XIX of the Social Security Act to receive long-term care benefits under the State plan for medical assistance under such Act if such an individual purchases a State approved long-term care insurance po licy covering long-term care for a period preceding such an individual's eligibi lity for medical assistance under title XIX of the Social Security Act.

(b) WAIVER OF CERTAIN REQUIREMENTS- The Secretary in providing for the demonstration project described in subsection (a), may waive the following r equirements in title XIX of the Social Security Act with respect to such project s.

(1) Sections 1901, 1902(a)(10) (A) and (C), 1903(a)(1), and 190 3(f), relating to categorical and income eligibility limits.

(2) Sections 1902(a)(10) (A) and (D), relating to amount, durat ion, and scope of services; and to diagnosis, type of illness, or condition.

(3) Section 1902(a)(10)(E), relating to qualified medicaid bene ficiaries.

(4) Section 1902(a)(23), relating to freedom of choice.

(5) Section 1902(a)(1), relating to statewideness.

(6) Sections 1902(a)(10), matter following (E) and 1902(a)(17), relating to comparability.

(7) Section 1902(a)(14), relating to premiums.

(8) Section 1902(a)(18), relating to liens and recovery of asse ts.

(9) Sections 1902(50) and (51), relating to personal needs allo wance, protection community spouse, and transfer of assets.

(c) STATE ASSURANCES- The States conducting demonstration projects under this section shall provide asssurances to the Secretary that--

(1) the estimated average per capita and aggregate expenditures for long-term care services for individuals under the waiver will not exceed es timated average per capita and aggregate expenditures for such services for such individuals under the State plan in the absence of the waiver;

(2) it will continue to make long-term care services available under the plan to any individual who would be entitled to long-term care service s under the plan as in effect before the waiver (except to the extent that subse quent Federal legislation specifically requires changes in eligibility for such services under the plan);

(3) it will not approve a long-term care insurance policy unles s it meets standards at least as stringent as those set forth in the National As sociation of Insurance Commissioners (NAIC) Long-Term Care Insurance Model Act a s of June 1989; and

(4) expenditures for long-term care services provided to indivi duals participating in the projects after the expiration of the projects shall b e shared by the State and Federal governments in accordance with title XIX formu lae in force at the time.

(d) APPLICATION, DURATION, AND ELIGIBILITY-

(1) The Secretary shall enter into an agreement with the States described in subsection (a) for the purpose of conducting demonstration project s as described in this section. The Secretary shall award such demonstrations in a budget neutral manner.

(2) The Secretary shall either approve or disapprove the applic ation of the State to participate in a demonstration project described in this s ection within 90 days of receipt of such application. If the Secretary disapprov es an application of a State described in subsection (a) to conduct a demonstrat ion project under this section, the Secretary shall within 30 days of such disap proval notify the State of the reasons for such disapproval and allow the State to correct any deficiencies and allow the State to resubmit a corrected applicat ion which the Secretary shall approve if it meets the requirements of this secti on.

(3) The demonstration project under this section shall be for a n initial period of 5 years. The Secretary shall provide for renewal of those de monstration projects for an additional 5 years which the Secretary determines ha ve met the requirements of this section.

(4) An individual who participates in a demonstration project u nder this section shall remain eligible for long-term care services under the St ate plan after the expiration of such project.

(e) ANNUAL STATE REPORTS- The States shall annually (during the dur ation of such projects) report to the Secretary on--

(1) the number of individuals enrolled in the demonstration pro jects in such States;

(2) the number of enrollees actually receiving long-term care s ervices under such demonstration projects (whether through long-term care insura nce or medical assistance under title XIX of the Social Security Act);

(3) the number of enrollees actually receiving long-term care i n the form of medical assistance; and

(4) the number and type (commercial, not for profit and HMO) ch aracteristics of private insurers with policies approved by the States under the demonstration projects.

(f) SECRETARY'S REPORT- The Secretary shall report to Congress on t he demonstration project established under this section not later than 4 years a fter the date of enactment of this section. Such report shall summarize and anal yze information reported by the State under subsection (e), and shall evaluate t he cost effectiveness of the demonstration project and make recommendations with respect to the desirability and appropriateness of authorizing any State to mak e long-term care services available on a similar basis.

SEC. 6271. MEDICAID COVERAGE OF ALCOHOLISM AND DRUG DEPENDENCY TREATM ENT SERVICES.

Section 1905(a) of the Social Security Act is amended by adding at the end the following new sentence: `No service (including counseling) shall be excluded from the definition of `medical assistance' solely because it is provid ed as a treatment service for alcoholism or drug dependency.'.

SEC. 6272. HOME AND COMMUNITY-BASED WAIVERS.

(a) TREATMENT OF ROOM AND BOARD- Subsections (c)(1) and (d)(1) of s ection 1915 of the Social Security Act (42 U.S.C. 1396n) are each amended by add ing at the end the following: `For purposes of this subsection, the term `room a nd board' shall not include an amount established under a method determined by t he State to reflect the portion of costs of rent and food attributable to an unr elated personal caregiver who is residing in the same household with an individu al who, but for the assistance of such caregiver, would require admission to a h ospital, nursing facility, or intermediate care facility for the mentally retard ed.'.

(b) TREATMENT OF DECERTIFIED FACILITIES- Notwithstanding any other provision of law, an intermediate care facility for the mentally retarded that h as been decertified or excluded from participation in the medical assistance pro gram established under title XIX of the Social Security Act shall be treated as a facility providing care `the cost of which could be reimbursed' under a State plan for purposes of determining whether to approve a waiver under section 1915( c)(1) of such Act and whether an individual is eligible for care under such a wa iver.

(c) ADJUSTMENT TO 1915(d) CEILING TO TAKE INTO ACCOUNT THE ADDED CO STS OF OBRA 87- Section 1915(d)(5)(B)(iv) (42 U.S.C. 1396n(d)(5)(B)(iv)) is amen ded by striking `this title' the first place it appears and inserting `this titl e whose provisions become effective on or after such date'.

(d) CHANGES TO FREEDOM OF CHOICE WAIVERS- Section 1915(c)(3) and (d )(3) (42 U.S.C. 1396n(c)(3) and (d)(3)) are each amended--

(1) by striking `and section' and inserting `section'; and

(2) by inserting after `community)', `and the requirements of s ection 1902(a)(23) (relating to restricting the recipient's choice of providers) , insofar as such requirements relate to the provision of case management servic es, where the State provides assurances satisfactory to the Secretary that such a restriction will not substantially limit the recipient's access to such servic es'.

SEC. 6273. MEDICAID PROVISIONS RELATING TO HEALTH MAINTENANCE ORGANIZ ATIONS.

(a) PHYSICIAN INCENTIVE PAYMENTS- Section 1903(m)(5) is amended by adding at the end of subparagraph (B) the following new subparagraph:

`(C)(i) If an organization with a contract under section 19 03(m) knowingly makes a direct and specific individual payment to a physician as an inducement to withhold or limit a specific medically necessary service to an identifiable patient, the organization shall be subject, in addition to any oth er penalties that may be prescribed by law, to a civil money penalty of not more than $25,000 for each determination.

`(ii) The provisions of section 1876(i)(8) shall apply to h ealth maintenance organizations with a contract under this subsection in the sam e manner and to the same extent as to health maintenance organizations with a co ntract under section 1876.'.

(b) MEDICAID ENROLLMENT WAIVER-

(1) GENERAL WAIVER AUTHORITY- The Secretary shall approve waive rs of the 75 percent enrollment requirement (described in section 1903(m)(2)(A)( i) of the Social Security Act) after the Secretary provides for--

(A) a study of situations where the 75-25 percent enrollmen t requirement (described in section 1903(m)(2)(A)(i) of the Social Security Act) is not practical or where alternative safeguards or procedures to private enrol lment and oversight could be used to assure that prepaid health care organizatio ns provide quality care and are fiscally sound;

(B) publication in the Federal Register by April 1, 1991, f or review and comment a set of minimum standards that prepaid organizations must meet to be considered eligible for the waiver described in this paragraph and t he terms under which such waivers will be approved; and

(C) publication of revised standards and terms as a final n otice.

(2) TERM OF AND RENEWAL OF WAIVERS- A waiver under this section shall initially be approved for three years; the Secretary shall provide terms for the renewal of such waivers.

SEC. 6274. STATE FLEXIBILITY IN IDENTIFYING AND PAYING DISPROPORTIONA TE SHARE HOSPITALS.

(a) IN GENERAL- Section 1923(b)(1) (42 U.S.C. 1396r-4(b)(1)) is ame nded by--

(1) striking the period at the end of subparagraph (B) and inse rting `or instead of (A) or (B)'; and

(2) adding after subparagraph (B) the following new subparagrap h:

`(C) the hospital meets other criteria specified by the Sta te which identify hospitals serving a disproportionate number of low income pati ents with special needs, so long as all hospitals determined to be disproportion ate share hospitals include, at the State's option, hospitals which meet one of the following--

`(i) the conditions specified in subparagraph (A) or (B ); or

`(ii) any criteria specified in an amendment to the Sta te plan which was submitted to and approved by the Secretary prior to May 1, 198 9.'.

(b) DIFFERENT PAYMENT LEVELS- Section 1923 (42 U.S.C. 1396r-4) is a mended in the matter following subsection (c) by adding after the last sentence the following: `Nothing in this section shall prohibit a State from establishing different payment adjustments for different types of hospitals that are defined or deemed to be disproportionate share hospitals provided that the amount of ea ch payment adjustment is reasonably related to the costs or proportion of servic es provided to medicaid or low-income patients, and that either--

`(A) the amount of each payment adjusted is equal to or gre ater than the minimum adjustment amount as specified in subsection (c); or< /ul>

`(B) the aggregate amount of payment adjustments under the plan for disproportionate share hospitals (as defined under a State plan approve d by the Secretary prior to December 22, 1987) is not less than the aggregate am ount of payment adjustments otherwise required to be made if paragraph (1) or (2 ) of subsection (c) applied.'.

(c) CONFORMING AMENDMENT- Section 1923(c)(2) (42 U.S.C. 1396r-4(c)( 2)) is amended by inserting after `State' `or the hospital's low-income utilizat ion rate (as defined in paragraph (b)(3))'.

SEC. 6275. EXTENSION OF PROVISION ON VOLUNTARY CONTRIBUTIONS AND PROV IDER-SPECIFIC TAXES.

Section 8431 of the Technical and Miscellaneous Revenue Act of 1988 is amended by striking `December 31, 1990' and inserting `September 30, 1991'.

SEC. 6276. PROHIBITION ON WAIVING REASONABLE AND ADEQUATE PAYMENT RAT ES.

(a) IN GENERAL- Section 1915(b) (42 U.S.C. 1396n(b)) is amended in the matter preceding paragraph (1) by inserting `(other than subsection (a)(13)( A))' after `section 1902'.

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall be e ffective with respect to calendar quarters beginning on or after January 1, 1991 .

Subtitle D--Trade Provisions

PART I--CUSTOMS USER FEES

SEC. 6301. CUSTOMS USER FEES.

(a) EXTENSION OF EFFECTIVE PERIOD FOR FEES- Paragraph (3) of sectio n 13031(j) of the Consolidated Omnibus Budget Reconciliation Act of 1985 (19 U.S .C. 58c(j)(3)) is amended by striking out `1991' and inserting `1995'.

(b) ADJUSTMENT OF FEES- Paragraph (9) of section 13031(a) of the Co nsolidated Omnibus Budget Reconciliation Act of 1985 (19 U.S.C. 58c(a)(9)) is am ended to read as follows:

`(9)(A) For the processing of merchandise that is formally ente red or released during any fiscal year, a fee in an amount equal to 0.17 percent ad valorem, unless adjusted under subparagraph (B).

`(B)(i) The Secretary of the Treasury may adjust the ad valorem rate specified in subparagraph (A) for merchandise that is formally entered or released during any fiscal year beginning after September 30, 1991, to an ad val orem rate (but not to a rate of more than 0.19 percent nor less than 0.15 percen t) that would, if charged, offset the salaries and expenses that will likely be incurred by the Customs Service in the processing of such entries and releases d uring that fiscal year.

`(ii) In determining the amount of any adjustment under clause (i), the Secretary of the Treasury shall take into account whether there is a su rplus or deficit in the fund established under section 613A of the Tariff Act of 1930 with respect to the provision of customs services for the processing of fo rmal entries and releases of merchandise.

`(iii) An adjustment may not be made under clause (i) with resp ect to the fee charged during any fiscal year unless the Secretary of the Treasu ry--

`(I) not later than 30 days after the date of the enactment of the Act providing regular appropriations for the Customs Service for that fi scal year, publishes a notice of intent to adjust the fees under this paragraph and the amount of such adjustment;

`(II) provides a period of not less than 30 days for public comment following publication of the notice described in subclause (I);

`(III) during the 30-day period beginning after the date of the publication of the notice described in subclause (I), consults with the Com mittee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives regarding the proposed adjustment; and

`(IV) no earlier than the expiration of the 30-day public c omment period and the 30-day consultation period, publishes in the Federal Regis ter notice of the final determination regarding the adjustment of fees.

`(iv) The 30 days referred to in clause (iii)(III) shall be com puted by excluding--

`(I) the days on which either House is not in session becau se of an adjournment of more than 3 days to a day certain or an adjournment of t he Congress sine die; and

`(II) any Saturday and Sunday, not excluded under subclause (I), when either House is not in session.

`(v) An adjustment made under this subparagraph is effective wi th respect to formal entries and releases made on or after the 15th calendar day after the date of publication of the notice required under clause (iii)(IV) and before the first day of the next fiscal year.

`(vi) Any fee charged under this paragraph, whether or not adju sted under this subparagraph, is subject to the limitations in subsection (b)(8) (A).'.

(c) AGGREGATION OF MERCHANDISE PROCESSING FEES- Section 111(f)(1)(B ) of the Customs and Trade Act of 1990 (Public Law 101-382) is amended by striki ng out `determined in' and inserting `currently in effect under'.

(d) CUSTOMS SERVICE ADMINISTRATION- Section 113 of the Customs and Trade Act of 1990 is amended--

(1) by inserting `and' after the semicolon at the end of subsec tion (a)(1);

(2) by striking out the semicolon at the end of subsection (a)( 2) and inserting a period;

(3) by striking out paragraphs (3), (4), and (5) of subsection (a); and

(4) by striking out `Committees referred to in subsection (a)(5 )' in subsection (b) and inserting `the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate'.

(e) MERCHANDISE PROCESSING FEES FOR CERTAIN SMALL AIRPORTS-
(1) IN GENERAL- Section 13031(b)(9) of the Consolidated Omnibus Budget Reconciliation Act of 1985 (19 U.S.C. 58c(b)(9)) is amended--
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(A) by inserting `and subsection (a)' in subparagraph (B) b efore the colon; and

(B) by inserting `other than an airport through which less than 25,000 informal entries are cleared annually' in subparagraph (B)(ii) befor e the end period.

(2) EFFECTIVE DATE- The amendments made by this subsection shal l take effect as if included in section 111 of the Customs and Trade Act of 1990 .

PART II--TECHNICAL CORRECTIONS

SEC. 6311. TECHNICAL AMENDMENTS TO THE HARMONIZED TARIFF SCHEDULE.

(a) REDESIGNATIONS- Each subheading of the Harmonized Tariff Schedu le of the United States that is listed in column A is redesignated as the subhea ding listed in column B opposite such column A subheading:

Column A
Column B
5111.20.60
5111.20.90
5111.30.60
5111.30.90
5111.90.70
5111.90.90
5112.19.10
5112.19.20
5112.19.60
5112.19.90
5112.90.60
5112.90.90
6116.10.50
6116.10.40
6116.93.20
6116.93.30
6116.99.60
6116.99.90
6216.00.23
6216.00.25
6216.00.29
6216.00.30
6216.00.47
6216.00.45
6702.90.40
6702.90.35
6702.90.60
6702.90.65
8712.00.10
8712.00.15
8712.00.20
8712.00.25
8712.00.30
8712.00.35
8714.94.20
8714.94.15
8714.94.50
8714.94.60
9022.90.80
9022.90.90
9603.10.20
9603.10.25
9603.10.70
9603.10.90
(b) MISCELLANEOUS AMENDMENTS- The Harmonized Tariff Schedule of the United States is further amended as follows:

(1) The article descriptions for subheadings 6116.10.10, 6116.9 2.10, 6116.93.10, 6116.99.30, 6216.00.10, 6216.00.34, and 6216.00.44 are each am ended to read as follows: `Other gloves, mittens, and mitts, principally designe d for sports use, including ski and snowmobile gloves, mittens, and mitts'.

(2) The superior heading to subheadings 8712.00.25 and 8712.00. 35 (as redesignated by subsection (a)) is amended by striking out `65' and inser ting `63.5'.

(3) Heading 9902.30.07 is amended by striking out `2929.90.10' and inserting `2929.10.40'.

(4) Heading 9902.30.08 is amended by striking out `2907.29.30' and inserting `2907.19.50'.

(5) Heading 9902.30.42 is amended by striking out `19532-03-07' and inserting `19532-03-7'.

(6) The article description for heading 9902.30.56 is amended b y striking out `hydroxethyl' and inserting `hydroxyethyl'.

(7) Heading 9902.30.83 (as enacted by section 388 of the Custom s and Trade Act of 1990) is redesignated as heading 9902.31.11 and, as so redesi gnated, is amended by striking out `piperadinyl' and inserting `piperidinyl'.

(8) Subchapter II of chapter 99 is amended by inserting in nume rical sequence the following new heading:

(9) Heading 9902.84.83 is amended by striking out `(A,C,E,IL)' and inserting `(A,C,CA,E,IL)'.

(10) Heading 9902.87.14 is amended by striking out `brakes,' th e first place it appears.

(c) Effective Date-

(1) Subject to paragraphs (2) and (3), the amendments made by s ubsections (a) and (b) apply with respect to articles entered, or withdrawn from warehouse for consumption, on or after October 1, 1990.

(2) Any amendment made by subsection (a) or (b) to a provision of the Harmonized Tariff Schedule of the United States that was the subject of a n amendment made by title III of the Customs and Trade Act of 1990 shall--< /ul>

(A) be treated as applying to that provision as established or amended by such title III; and

(B) if the amendment made by such title III has retroactive application under section 485(b) of such Act, be treated as applying with respe ct to entries made after the relevant applicable date (as defined in paragraph ( 2)(A) of such section 485(b)).

(3) Notwithstanding section 514 of the Tariff Act of 1930 or an y other provision of law, upon proper request filed with the appropriate customs officer before April 1, 1991, any entry--

(A) which was made after December 31, 1988, and before Octo ber 1, 1990; and

(B) with respect to which there would have been a lesser du ty if any amendment made by subsection (b)(1) applied to such entry;

shall be liquidated or reliquidated as though such amendment appl ied to such entry.

SEC. 6312. TECHNICAL AMENDMENTS TO CERTAIN CUSTOMS LAWS.

(a) CUSTOMS FORFEITURE FUND-

(1) Paragraph (5) of section 121 of the Customs and Trade Act o f 1990 is repealed and subsection (f) of section 613A of the Tariff Act of 1930 shall be applied as if the amendment made by such paragraph (5) had not been ena cted.

(2) Paragraph (2) of such section 613A(f) (as in effect after t he application of paragraph (1)) is amended to read as follows:

`(2)(A) Subject to subparagraph (B), there are authorized to be appropriated from the Fund not to exceed $20,000,000 for each fiscal year to ca rry out the purposes set forth in subsections (a)(3) and (b) for such fiscal yea r.

`(B) Of the amount authorized to be appropriated under subparag raph (A), not to exceed the following shall be available to carry out the purpos es set forth in subsection (a)(3):

`(i) $14,855,000 for fiscal year 1991.

`(ii) $15,598,000 for fiscal year 1992.'.

(b) CERTAIN ENTRIES- Section 484 of the Customs and Trade Act of 19 90 (Public Law 101-382) is amended by striking out `1801-000027' and inserting `1801-7-000027'.

(c) EFFECTIVE DATE- The provisions of this section take effect Augu st 21, 1990.

Subtitle E--Pension Benefit Guarantee Corporation Premiums

SEC. 6401. INCREASE IN PREMIUM RATES.

(a) INCREASE IN BASIC PREMIUM-

(1) IN GENERAL- Clause (i) of section 4006(a)(3)(A) of the Empl oyee Retirement Income Security Act of 1974 (29 U.S.C. 1306(a)(3)(A)) is amended by striking `for plan years beginning after December 31, 1987, an amount equal to the sum of $16' and inserting `for plan years beginning after December 31, 19 90, an amount equal to the sum of $19'.

(2) CONFORMING AMENDMENT- Section 4006(c)(1)(A) of such Act (29 U.S.C. 1306(c)(1)(A)) is amended by adding at the end thereof the following new clause:

`(iv) with respect to each plan year beginning after De cember 31, 1987, and before January 1, 1991, an amount equal to $16 for each ind ividual who was a participant in such plan during the plan year, and'.

(b) INCREASE IN ADDITIONAL PREMIUM- Section 4006(a)(3)(E) of such A ct (29 U.S.C. 1306(a)(3)(E)) is amended--

(1) by striking `$6.00' in clause (ii) and inserting `$9.00', a nd

(2) by striking `$34' in clause (iv)(I) and inserting `$53'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to plan years beginning after December 31, 1990.

Subtitle F--Child Care and Development Block Grant

SEC. 6501. CHILD CARE AND DEVELOPMENT BLOCK GRANT.

Chapter 8 of subtitle A of title IV of the Omnibus Budget Reconcili ation Act of 1981 (Public Law 97-35) is amended--

(1) by redesignating subchapters C, D, and E, as subchapters D, E, and F, respectively; and

(2) by inserting after subchapter B the following new subchapte r:

`Subchapter C--Child Care and Development Block Grant

`SEC. 658A. SHORT TITLE.

`This subchapter may be cited as the `Child Care and Development Bl ock Grant Act of 1990'.

`SEC. 658B. AUTHORIZATION OF APPROPRIATIONS.

`There are authorized to be appropriated to carry out this subchapt er, $750,000,000 for fiscal year 1991, $825,000,000 for fiscal year 1992, $925,0 00,000 for fiscal year 1993, and such sums as may be necessary for each of the f iscal years 1994 and 1995.

`SEC. 658C. ESTABLISHMENT OF BLOCK GRANT PROGRAM.

`The Secretary is authorized to make grants to States in accordance with the provisions of this subchapter.

`SEC. 658D. LEAD AGENCY.

`(a) DESIGNATION- The chief executive officer of a State desiring t o receive a grant under this subchapter shall designate, in an application submi tted to the Secretary under section 658E, an appropriate State agency that compl ies with the requirements of subsection (b) to act as the lead agency.

`(b) DUTIES-

`(1) IN GENERAL- The lead agency shall--

`(A) administer, directly or through other State agencies, the financial assistance received under this subchapter by the State;
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`(B) develop the State plan to be submitted to the Secretar y under section 658E(a);

`(C) in conjunction with the development of the State plan as required under subparagraph (B), hold at least one hearing in the State to pr ovide to the public an opportunity to comment on the provision of child care ser vices under the State plan; and

`(D) coordinate the provision of services under this subcha pter with other Federal, State and local child care and early childhood developm ent programs.

`(2) DEVELOPMENT OF PLAN- In the development of the State plan described in paragraph (1)(B), the lead agency shall consult with appropriate re presentatives of units of general purpose local government. Such consultations m ay include consideration of local child care needs and resources, the effectiven ess of existing child care and early childhood development services, and the met hods by which funds made available under this subchapter can be used to effectiv ely address local shortages.

`SEC. 658E. APPLICATION AND PLAN.

`(a) APPLICATION- To be eligible to receive assistance under this s ubchapter, a State shall prepare and submit to the Secretary an application at s uch time, in such manner, and containing such information as the Secretary shall by rule require, including--

`(1) an assurance that the State will comply with the requireme nts of this subchapter; and

`(2) a State plan that meets the requirements of subsection (c) .

`(b) PERIOD COVERED BY PLAN- The State plan contained in the applic ation under subsection (a) shall be designed to be implemented--

`(1) during a 3-year period for the initial State plan; and

`(2) during a 2-year period for subsequent State plans.

`(c) Requirements of a Plan-

`(1) LEAD AGENCY- The State plan shall identify the lead agency designated under section 658D.

`(2) POLICIES AND PROCEDURES- The State plan shall:

`(A) PARENTAL CHOICE OF PROVIDERS- Provide assurances that- -

`(i) the parent or parents of each eligible child withi n the State who receives or is offered child care services for which financial a ssistance is provided under this subchapter, other than through assistance provi ded under paragraph (3)(C), are given the option either--

`(I) to enroll such child with a child care provide r that has a grant or contract for the provision of such services; or
< /ul>

`(II) to receive a child care certificate as define d in section 658P(2);

`(ii) in cases in which the parent selects the option d escribed in clause (i)(I), the child will be enrolled with the eligible provider selected by the parent to the maximum extent practicable; and

`(iii) child care certificates offered to parents selec ting the option described in clause (i)(II) shall be of a value commensurate wit h the subsidy value of child care services provided under the option described i n clause (i)(I);

except that nothing in this subparagraph shall require a Stat e to have a child care certificate program in operation prior to October 1, 1991 .

`(B) UNLIMITED PARENTAL ACCESS- Provide assurances that pro cedures are in effect within the State to ensure that child care providers who p rovide services for which assistance is made available under this subchapter aff ord parents unlimited access to their children and to the providers caring for t heir children, during the normal hours of operation of such providers and whenev er such children are in the care of such providers.

`(C) PARENTAL COMPLAINTS- Provide assurances that the State maintains a record of substantiated parental complaints and makes information r egarding such parental complaints available to the public on request.
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`(D) CONSUMER EDUCATION- Provide assurances that consumer e ducation information will be made available to parents and the general public wi thin the State concerning licensing and regulatory requirements, complaint proce dures, and policies and practices relative to child care services within the Sta te.

`(E) COMPLIANCE WITH STATE AND LOCAL REGULATORY REQUIREMENT S- Provide assurances that--

`(i) all providers of child care services within the St ate for which assistance is provided under this subchapter comply with all licen sing or regulatory requirements (including registration requirements) applicable under State and local law; and

`(ii) providers within the State that are not required to be licensed or regulated under State or local law are required to be register ed with the State prior to payment being made under this subchapter, in accordan ce with procedures designed to facilitate appropriate payment to such providers, and to permit the State to furnish information to such providers, including inf ormation on the availability of health and safety training, technical assistance , and any relevant information pertaining to regulatory requirements in the Stat e, and that such providers shall be permitted to register with the State after s election by the parents of eligible children and before such payment is made.

This subparagraph shall not be construed to prohibit a State from imposing more stringent standards and licensing or regulatory requirements on child care providers within the State that provide services for which assista nce is provided under this subchapter than the standards or requirements imposed on other child care providers in the State.

`(F) ESTABLISHMENT OF HEALTH AND SAFETY REQUIREMENTS- Provi de assurances that there are in effect within the State, under State or local la w, requirements designed to protect the health and safety of children that are a pplicable to child care providers that provide services for which assistance is made available under this subchapter. Such requirements shall include--

`(i) the prevention and control of infectious diseases (including immunization);

`(ii) building and physical premises safety; and

`(iii) minimum health and safety training appropriate t o the provider setting.

Nothing in this subparagraph shall be construed to require th e establishment of additional health and safety requirements for child care prov iders that are subject to health and safety requirements in the categories descr ibed in this subparagraph on the date of enactment of this subchapter under Stat e or local law.

`(G) COMPLIANCE WITH STATE AND LOCAL HEALTH AND SAFETY REQU IREMENTS- Provide assurances that procedures are in effect to ensure that child care providers within the State that provide services for which assistance is pr ovided under this subchapter comply with all applicable State or local health an d safety requirements as described in subparagraph (F).

`(H) REDUCTION IN STANDARDS- Provide assurances that if the State reduces the level of standards applicable to child care services provided in the State on the date of enactment of this subchapter, the State shall infor m the Secretary of the rationale for such reduction in the annual report of the State described in section 658K.

`(I) REVIEW OF STATE LICENSING AND REGULATORY REQUIREMENTS- Provide assurances that not later than 18 months after the date of the submissi on of the application under section 658E, the State will complete a full review of the law applicable to, and the licensing and regulatory requirements and poli cies of, each licensing agency that regulates child care services and programs i n the State unless the State has reviewed such law, requirements, and policies i n the 3-year period ending on the date of the enactment of this subchapter.

`(J) SUPPLEMENTATION- Provide assurances that funds receive d under this subchapter by the State will be used only to supplement, not to sup plant, the amount of Federal, State, and local funds otherwise expended for the support of child care services and related programs in the State.

`(3) USE OF BLOCK GRANT FUNDS-

`(A) GENERAL REQUIREMENT- The State plan shall provide that the State will use the amounts provided to the State for each fiscal year under this subchapter as required under subparagraphs (B) and (C).

`(B) CHILD CARE SERVICES- Subject to the reservation contai ned in subparagraph (C), the State shall use amounts provided to the State for e ach fiscal year under this subchapter for--

`(i) child care services, that meet the requirements of this subchapter, that are provided to eligible children in the State on a slidi ng fee scale basis using funding methods provided for in section 658E(c)(2)(A), with priority being given for services provided to children of families with ver y low family incomes (taking into consideration family size) and to children wit h special needs; and

`(ii) activities designed to improve the affordability, availability and quality of child care, and to expand the range of choices of c hild care services available to parents.

`(C) ACTIVITIES TO IMPROVE THE QUALITY OF CHILD CARE AND TO INCREASE THE AVAILABILITY OF EARLY CHILDHOOD DEVELOPMENT AND BEFORE- AND AFTER- SCHOOL CARE SERVICES- The State shall reserve 25 percent of the amounts provided to the State for each fiscal year under this subchapter to carry out activities designed to improve the quality of child care (as described in section 658G) an d to provide before- and after-school and early childhood development services ( as described in section 658H).

`(4) PAYMENT RATES-

`(A) IN GENERAL- The State plan shall provide assurances th at payment rates for the provision of child care services for which assistance i s provided under this subchapter are sufficient to ensure equal access for eligi ble children to comparable child care services in the State or substate area tha t are provided to children whose parents are not eligible to receive assistance under this subchapter or for child care assistance under any other Federal or St ate programs. Such payment rates shall take into account the variations in the c osts of providing child care in different settings and to children of different age groups, and the additional costs of providing child care for children with s pecial needs.

`(B) CONSTRUCTION- Nothing in this paragraph shall be const rued to create a private right of action.

`(5) SLIDING FEE SCALE- The State plan shall provide that the S tate will establish and periodically revise, by rule, a sliding fee scale that p rovides for cost sharing by the families that receive child care services for wh ich assistance is provided under this subchapter.

`(d) APPROVAL OF APPLICATION- The Secretary shall approve an applic ation that satisfies the requirements of this section.

`SEC. 658F. LIMITATIONS ON STATE ALLOTMENTS.

`(a) NO ENTITLEMENT TO CONTRACT OR GRANT- Nothing in this subchapte r shall be construed--

`(1) to entitle any child care provider or recipient of a child care certificate to any contract, grant or benefit; or

`(2) to limit the right of any State to impose additional limit ations or conditions on contracts or grants funded under this subchapter.

`(b) CONSTRUCTION OF FACILITIES-

`(1) IN GENERAL- No funds made available under this subchapter shall be expended for the purchase or improvement of land, or for the purchase, construction, or permanent improvement (other than minor remodeling) of any buil ding or facility.

`(2) SECTARIAN AGENCY OR ORGANIZATION- In the case of a sectari an agency or organization, no funds made available under this subchapter may be used for the purposes described in paragraph (1) except to the extent that renov ation or repair is necessary to bring the facility of such agency or organizatio n into compliance with health and safety requirements referred to in section 658 E(c)(2)(F).

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

`A State that receives financial assistance under this subchapter s hall use not less than 40 percent of the amounts reserved by such State under se ction 658E(c)(3)(C) for each fiscal year for one or more of the following:< /ul>
`(1) RESOURCE AND REFERRAL PROGRAMS- Operating directly or prov iding financial assistance to private nonprofit organizations or public organiza tions (including units of general purpose local government) for the development, establishment, expansion, operation, and coordination of resource and referral programs specifically related to child care.

`(2) GRANTS OR LOANS TO ASSIST IN MEETING STATE AND LOCAL STAND ARDS- Making grants or providing loans to child care providers to assist such pr oviders in meeting applicable State and local child care standards.

`(3) ESTABLISHMENT AND IMPROVEMENT OF STANDARDS- Establishing a nd improving State and local child care standards and requirements.

`(4) MONITORING OF COMPLIANCE WITH LICENSING AND REGULATORY REQ UIREMENTS- Improving the monitoring of compliance with, and enforcement of, Stat e and local licensing and regulatory requirements (including registration requir ements).

`(5) TRAINING- Providing training and technical assistance in a reas appropriate to the provision of child care services, such as training in he alth and safety, nutrition, first aid, the recognition of communicable diseases, child abuse detection and prevention, and the care of children with special nee ds.

`(6) COMPENSATION- Improving salaries and other compensation pa id to full- and part-time staff who provide child care services for which assist ance is provided under this subchapter.

`SEC. 658H. EARLY CHILDHOOD DEVELOPMENT AND BEFORE- AND AFTER-SCHOOL SERVICES.

`(a) IN GENERAL- A State that receives financial assistance under t his subchapter shall use not less than 40 percent of the amounts reserved by suc h State under section 658E(c)(3)(C) for each fiscal year to establish or expand and conduct, through the provision of grants or contracts, early childhood devel opment and before- and after-school child care programs.

`(b) PROGRAM DESCRIPTION- Programs that receive assistance under th is section shall--

`(1) in the case of early childhood development programs, consi st of services that are not intended to serve as a substitute for a compulsory a cademic programs but that are intended to provide an environment that enhances t he educational, social, cultural, emotional, and recreational development of chi ldren; and

`(2) in the case of before- and after-school child care program s--

`(A) be provided Monday through Friday, including school ho lidays and vacation periods other than legal public holidays, to children attend ing early childhood development programs, kindergarten, or elementary or seconda ry school classes during such times of the day and on such days that regular ins tructional services are not in session; and

`(B) not be intended to extend or replace the regular acade mic program.

`(c) PRIORITY FOR ASSISTANCE- In awarding grants and contracts unde r this section, the State shall give the highest priority to geographic areas wi thin the State that are eligible to receive grants under section 1006 of the Ele mentary and Secondary Education Act of 1965, and shall then give priority to--

`(1) any other areas with concentrations of poverty; and

`(2) any areas with very high or very low population densities.

`SEC. 658I. ADMINISTRATION AND ENFORCEMENT.

`(a) ADMINISTRATION- The Secretary shall--

`(1) coordinate all activities of the Department of Health and Human Services relating to child care, and, to the maximum extent practicable, c oordinate such activities with similar activities of other Federal entities;

`(2) collect, publish and make available to the public a listin g of State child care standards at least once every 3 years; and

`(3) provide technical assistance to assist States to carry out this subchapter, including assistance on a reimbursable basis.

`(b) Enforcement-

`(1) REVIEW OF COMPLIANCE WITH STATE PLAN- The Secretary shall review and monitor State compliance with this subchapter and the plan approved u nder section 658E(c) for the State, and shall have the power to terminate paymen ts to the State in accordance with paragraph (2).

`(2) Noncompliance-

`(A) IN GENERAL- If the Secretary, after reasonable notice to a State and opportunity for a hearing, finds that--

`(i) there has been a failure by the State to comply su bstantially with any provision or requirement set forth in the plan approved und er section 658E(c) for the State; or

`(ii) in the operation of any program for which assista nce is provided under this subchapter there is a failure by the State to comply substantially with any provision of this subchapter;

the Secretary shall notify the State of the finding and that no further payments may be made to such State under this subchapter (or, in the case of noncompliance in the operation of a program or activity, that no further payments to the State will be made with respect to such program or activity) un til the Secretary is satisfied that there is no longer any such failure to compl y or that the noncompliance will be promptly corrected.

`(B) ADDITIONAL SANCTIONS- In the case of a finding of nonc ompliance made pursuant to subparagraph (A), the Secretary may, in addition to i mposing the sanctions described in such subparagraph, impose other appropriate s anctions, including recoupment of money improperly expended for purposes prohibi ted or not authorized by this subchapter, and disqualification from the receipt of financial assistance under this subchapter.

`(C) NOTICE- The notice required under subparagraph (A) sha ll include a specific identification of any additional sanction being imposed un der subparagraph (B).

`(3) ISSUANCE OF RULES- The Secretary shall establish by rule p rocedures for--

`(A) receiving, processing, and determining the validity of complaints concerning any failure of a State to comply with the State plan or a ny requirement of this subchapter; and

`(B) imposing sanctions under this section.
< /ul>
`SEC. 658J. PAYMENTS.

`(a) IN GENERAL- Subject to the availability of appropriations, a S tate that has an application approved by the Secretary under section 658E(d) sha ll be entitled to a payment under this section for each fiscal year in an amount equal to its allotment under section 658O for such fiscal year.

`(b) METHOD OF PAYMENT-

`(1) IN GENERAL- Subject to paragraph (2), the Secretary may ma ke payments to a State in installments, and in advance or by way of reimbursemen t, with necessary adjustments on account of overpayments or underpayments, as th e Secretary may determine.

`(2) LIMITATION- The Secretary may not make such payments in a manner that prevents the State from complying with the requirement specified in section 658E(c)(3).

`(c) SPENDING OF FUNDS BY STATE- Payments to a State from the allot ment under section 658O for any fiscal year may be expended by the State in that fiscal year or in the succeeding fiscal year.

`SEC. 658K. ANNUAL REPORT AND AUDITS.

`(a) ANNUAL REPORT- Not later than December 31, 1992, and annually thereafter, a State that receives assistance under this subchapter shall prepare and submit to the Secretary a report--

`(1) specifying the uses for which the State expended funds spe cified under paragraph (3) of section 658E(c) and the amount of funds expended f or such uses;

`(2) containing available data on the manner in which the child care needs of families in the State are being fulfilled, including information concerning--

`(A) the number of children being assisted with funds provi ded under this subchapter, and under other Federal child care and pre-school pro grams;

`(B) the type and number of child care programs, child care providers, caregivers, and support personnel located in the State; and

`(C) salaries and other compensation paid to full- and part -time staff who provide child care services;

`(3) describing the extent to which the affordability and avail ability of child care services has increased;

`(4) if applicable, describing, in either the first or second s uch report, the findings of the review of State licensing and regulatory require ments and policies described in section 658E(c), including a description of acti ons taken by the State in response to such reviews;

`(5) containing an explanation of any State action, in accordan ce with section 658E, to reduce the level of child care standards in the State, if applicable; and

`(6) describing the standards and health and safety requirement s applicable to child care providers in the State, including a description of St ate efforts to improve the quality of child care;

during the period for which such report is required to be submitted.

`(b) AUDITS-

`(1) REQUIREMENT- A State shall, after the close of each progra m period covered by a application approved under section 658E(d) audit its expen ditures during such program period from amounts received under this subchapter.

`(2) INDEPENDENT AUDITOR- Audits under this subsection shall be conducted by an entity that is independent of any agency administering activiti es that receive assistance under this subchapter and be in accordance with gener ally accepted auditing principles.

`(3) SUBMISSION- Not later than 30 days after the completion of an audit under this subsection, the State shall submit a copy of the audit to t he legislature of the State and to the Secretary.

`(4) REPAYMENT OF AMOUNTS- Each State shall repay to the United States any amounts determined through an audit under this subsection not to hav e been expended in accordance with this subchapter, or the Secretary may offset such amounts against any other amount to which the State is or may be entitles u nder this subchapter.

`SEC. 658L. REPORT BY SECRETARY.

`Not later than July 31, 1993, and annually thereafter, the Secreta ry shall prepare and submit to the Committee on Education and Labor of the House of Representatives and the Committee on Labor and Human Resources of the Senate a report that contains a summary and analysis of the data and information provi ded to the Secretary in the State reports submitted under section 658K. Such rep ort shall include an assessment, and where appropriate, recommendations for the Congress concerning efforts that should be undertaken to improve the access of t he public to quality and affordable child care in the United States.

`SEC. 658M. LIMITATIONS ON USE OF FINANCIAL ASSISTANCE FOR CERTAIN PU RPOSES.

`(a) SECTARIAN PURPOSES AND ACTIVITIES- No financial assistance pro vided under this subchapter, pursuant to the choice of a parent under section 65 8E(c)(2)(A)(i)(I) or through any other grant or contract under the State plan, s hall be expended for any sectarian purpose or activity, including sectarian wors hip or instruction.

`(b) TUITION- With regard to services provided to students enrolled in grades 1 through 12, no financial assistance provided under this subchapter shall be expended for--

`(1) any services provided to such students during the regular school day;

`(2) any services for which such students receive academic cred it toward graduation; or

`(3) any instructional services which supplant or duplicate the academic program of any public or private school.

`SEC. 658N. NONDISCRIMINATION.

`(a) RELIGIOUS NONDISCRIMINATION-

`(1) CONSTRUCTION-

`(A) IN GENERAL- Except as provided in subparagraph (B), no thing in this section shall be construed to modify or affect the provisions of a ny other Federal law or regulation that relates to discrimination in employment on the basis of religion.

`(B) EXCEPTION- A sectarian organization may require that e mployees adhere to the religious tenets and teachings of such organization, and such organization may require that employees adhere to rules forbidding the use of drugs or alcohol.

`(2) DISCRIMINATION AGAINST CHILD-

`(A) IN GENERAL- A child care provider (other than a family child care provider) that receives assistance under this subchapter shall not d iscriminate against any child on the basis of religion in providing child care s ervices.

`(B) NON-FUNDED CHILD CARE SLOTS- Nothing in this section s hall prohibit a child care provider from selecting children for child care slots that are not funded directly with assistance provided under this subchapter bec ause such children or their family members participate on a regular basis in oth er activities of the organization that owns or operates such provider.

`(3) EMPLOYMENT IN GENERAL-

`(A) PROHIBITION- A child care provider that receives assis tance under this subchapter shall not discriminate in employment on the basis of the religion of the prospective employee if such employee's primary responsibil ity is or will be working directly with children in the provision of child care services.

`(B) QUALIFIED APPLICANTS- If two or more prospective emplo yees are qualified for any position with a child care provider receiving assista nce under this subchapter, nothing in this section shall prohibit such child car e provider from employing a prospective employee who is already participating on a regular basis in other activities of the organization that owns or operates s uch provider.

`(C) PRESENT EMPLOYEES- This paragraph shall not apply to e mployees of child care providers receiving assistance under this subchapter if s uch employees are employed with the provider on the date of enactment of this su bchapter.

`(4) EMPLOYMENT AND ADMISSION PRACTICES- Notwithstanding paragr aphs (1)(B), (2), and (3), if assistance provided under this subchapter, and any other Federal or State program, amounts to 80 percent or more of the operating budget of a child care provider that receives such assistance, the Secretary sha ll not permit such provider to receive any further assistance under this subchap ter unless the grant or contract relating to the financial assistance, or the em ployment and admissions policies of the provider, specifically provides that no person with responsibilities in the operation of the child care program, project , or activity of the provider will discriminate against any individual in employ ment, if such employee's primary responsibility is or will be working directly w ith children in the provision of child care, or admissions because of the religi on of such individual.

`(b) EFFECT ON STATE LAW- Nothing in this subchapter shall be const rued to supersede or modify any provision of a State constitution or State law t hat prohibits the expenditure of public funds in or by sectarian institutions, e xcept that no provision of a State constitution or State law shall be construed to prohibit the expenditure in or by sectarian institutions of any Federal funds provided under this subchapter.

`SEC. 658O. AMOUNTS RESERVED; ALLOTMENTS.

`(a) AMOUNTS RESERVED-

`(1) TERRITORIES AND POSSESSIONS- The Secretary shall reserve n ot to exceed one half of 1 percent of the amount appropriated under this subchap ter in each fiscal year for payments to Guam, American Samoa, the Virgin Islands of the United States, the Commonwealth of the Northern Mariana Islands, and the Trust Territory of the Pacific Islands to be allotted in accordance with their respective needs.

`(2) INDIANS TRIBES- The Secretary shall reserve not more than 3 percent of the amount appropriated under section 658B in each fiscal year for payments to Indian tribes and tribal organizations with applications approved un der subsection (c).

`(b) State Allotment-

`(1) GENERAL RULE- From the amounts appropriated under section 658B for each fiscal year remaining after reservations under subsection (a), the Secretary shall allot to each State an amount equal to the sum of--

`(A) an amount that bears the same ratio to 50 percent of s uch remainder as the product of the young child factor of the State and the allo tment percentage of the State bears to the sum of the corresponding products for all States; and

`(B) an amount that bears the same ratio to 50 percent of s uch remainder as the product of the school lunch factor of the State and the all otment percentage of the State bears to the sum of the corresponding products fo r all States.

`(2) YOUNG CHILD FACTOR- The term `young child factor' means th e ratio of the number of children in the State under 5 years of age to the numbe r of such children in all States as provided by the most recent annual estimates of population in the States by the Census Bureau of the Department of Commerce.

`(3) SCHOOL LUNCH FACTOR- The term `school lunch factor' means the ratio of the number of children in the State who are receiving free or reduc ed price lunches under the school lunch program established under the National S chool Lunch Act (42 U.S.C. 1751 et seq.) to the number of such children in all t he States as determined annually by the Department of Agriculture.

`(4) Allotment percentage-

`(A) IN GENERAL- The allotment percentage for a State is de termined by dividing the per capita income of all individuals in the United Stat es, by the per capita income of all individuals in the State.

`(B) LIMITATIONS- If an allotment percentage determined und er subparagraph (A)--

`(i) exceeds 1.2 percent, then the allotment percentage of that State shall be considered to be 1.2 percent; and

`(ii) is less than 0.8 percent, then the allotment perc entage of the State shall be considered to be 0.8 percent.

`(C) PER CAPITA INCOME- For purposes of subparagraph (A), p er capita income shall be--

`(i) determined at 2-year intervals;

`(ii) applied for the 2-year period beginning on Octobe r 1 of the first fiscal year beginning on the date such determination is made; a nd

`(iii) equal to the average of the annual per capita in comes for the most recent period of 3 consecutive years for which satisfactory d ata are available from the Department of Commerce at the time such determination is made.

`(c) PAYMENTS FOR THE BENEFIT OF INDIAN CHILDREN-

`(1) GENERAL AUTHORITY- From amounts reserved under subsection (a)(2), the Secretary may make grants to or enter into contracts with Indian tri bes or tribal organizations that submit applications under this section, for the planning and carrying out of programs or activities consistent with the purpose s of this subchapter.

`(2) APPLICATIONS AND REQUIREMENTS- An application for a grant or contract under this section shall provide that:

`(A) COORDINATION- The applicant will coordinate, to the ma ximum extent feasible, with the lead agency in the State or States in which the applicant will carry out programs or activities under this section.

`(B) SERVICES ON RESERVATIONS- In the case of an applicant located in a State other than Alaska, California, or Oklahoma, programs and acti vities under this section will be carried out on the Indian reservation for the benefit of Indian children.

`(C) REPORTS AND AUDITS- The applicant will make such repor ts on, and conduct such audits of, programs and activities under a grant or cont ract under this section as the Secretary may require.

`(3) CONSIDERATION OF SECRETARIAL APPROVAL- In determining whet her to approve an application for a grant or contract under this section, the Se cretary shall take into consideration--

`(A) the availability of child care services provided in ac cordance with this subchapter by the State or States in which the applicant prop oses to carry out a program to provide child care services; and

`(B) whether the applicant has the ability (including skill s, personnel, resources, community support, and other necessary components) to s atisfactorily carry out the proposed program or activity.

`(4) THREE-YEAR LIMIT- Grants or contracts under this section s hall be for periods not to exceed 3 years.

`(5) DUAL ELIGIBILITY OF INDIAN CHILDREN- The awarding of a gra nt or contract under this section for programs or activities to be conducted in a State or States shall not affect the eligibility of any Indian child to receiv e services provided or to participate in programs and activities carried out und er a grant to the State or States under this subchapter.

`(d) DATA AND INFORMATION- The Secretary shall obtain from each app ropriate Federal agency, the most recent data and information necessary to deter mine the allotments provided for in subsection (b).

`(e) Reallotments-

`(1) IN GENERAL- Any portion of the allotment under subsection (b) to a State that the Secretary determines is not required to carry out a Stat e plan approved under section 658E(d), in the period for which the allotment is made available, shall be reallotted by the Secretary to other States in proporti on to the original allotments to the other States.

`(2) LIMITATIONS-

`(A) REDUCTION- The amount of any reallotment to which a St ate is entitled to under paragraph (1) shall be reduced to the extent that it ex ceeds the amount that the Secretary estimates will be used in the State to carry out a State plan approved under section 658E(d).

`(B) REALLOTMENTS- The amount of such reduction shall be si milarly reallotted among States for which no reduction in an allotment or reallo tment is required by this subsection.

`(3) AMOUNTS REALLOTTED- For purposes of any other section of t his subchapter, any amount reallotted to a State under this subsection shall be considered to be part of the allotment made under subsection (b) to the State.

`(f) DEFINITION- For the purposes of this section, the term `State' includes only the 50 States, the District of Columbia, and the Commonwealth of Puerto Rico.

`SEC. 658P. DEFINITIONS.

`As used in this subchapter:

`(1) CAREGIVER- The term `caregiver' means an individual who pr ovides a service directly to an eligible child on a person-to-person basis.

`(2) CHILD CARE CERTIFICATE- The term `child care certificate' means a certificate (that may be a check or other disbursement) that is issued b y a State or local government under this subchapter directly to a parent who may use such certificate only as payment for child care services. Nothing in this s ubchapter shall preclude the use of such certificates for sectarian child care s ervices if freely chosen by the parent. For purposes of this subchapter, child c are certificates shall not be considered to be grants or contracts.

`(3) ELEMENTARY SCHOOL- The term `elementary school' means a da y or residential school that provides elementary education, as determined under State law.

`(4) ELIGIBLE CHILD- The term `eligible child' means an individ ual--

`(A) who is less than 13 years of age;

`(B) whose family income does not exceed 75 percent of the State median income for a family of the same size; and

`(C) who--

`(i) resides with a parent or parents who are working o r attending a job training or educational program; or

`(ii) is receiving, or needs to receive, protective ser vices and resides with a parent or parents not described in clause (i).

`(5) ELIGIBLE CHILD CARE PROVIDER- The term `eligible child car e provider' means--

`(A) a center-based child care provider, a group home child care provider, a family child care provider, or other provider of child care se rvices for compensation that--

`(i) is licensed, regulated, or registered under State law as described in section 658E(c)(2)(E); and

`(ii) satisfies the State and local requirements, inclu ding those referred to in section 658E(c)(2)(F);

applicable to the child care services it provides; or

`(B) a child care provider that is 18 years of age or older who provides child care services only to eligible children who are, by affinity or consanguinity, or by court decree, the grandchild, niece, or nephew of such provider, if such provider is registered and complies with any State requirement s that govern child care provided by the relative involved.

`(6) FAMILY CHILD CARE PROVIDER- The term `family child care pr ovider' means one individual who provides child care services for fewer than 24 hours per day, as the sole caregiver, and in a private residence.

`(7) INDIAN TRIBE- The term `Indian tribe' has the meaning give n it in section 4(b) of the Indian Self-Determination and Education Assistance A ct (25 U.S.C. 450b(b)).

`(8) LEAD AGENCY- The term `lead agency' means the agency desig nated under section 658B(a).

`(9) PARENT- The term `parent' includes a legal guardian or oth er person standing in loco parentis.

`(10) SECONDARY SCHOOL- The term `secondary school' means a day or residential school which provides secondary education, as determined under S tate law.

`(11) SECRETARY- The term `Secretary' means the Secretary of He alth and Human Services unless the context specifies otherwise.

`(12) SLIDING FEE SCALE- The term `sliding fee scale' means a s ystem of cost sharing by a family based on income and size of the family.

`(13) STATE- The term `State' means any of the several States, the District of Columbia, the Virgin Islands of the United States, the Commonwea lth of Puerto Rico, Guam, American Samoa, the Commonwealth of the Northern Maria na Islands, and the Trust Territory of the Pacific Islands.

`(14) TRIBAL ORGANIZATION- The term `tribal organization' has t he meaning given it in section 4(c) of the Indian Self-Determination and Educati on Assistance Act (25 U.S.C. 450b(c)).

`SEC. 658Q. PARENTAL RIGHTS AND RESPONSIBILITIES.

`Nothing in this subchapter shall be construed or applied in any ma nner to infringe on or usurp the moral and legal rights and responsibilities of parents or legal guardians.

`SEC. 658R. SEVERABILITY.

`If any provision of this subchapter or the application thereof to any person or circumstance is held invalid, the invalidity shall not affect othe r provisions of applications of this subchapter which can be given effect withou t regard to the invalid provision or application, and to this end the provisions of this subchapter shall be severable.'.

TITLE VII--REVENUE PROVISIONS

SEC. 7100. SHORT TITLE; ETC.

(a) SHORT TITLE- This title may be cited as the `Revenue Reconcilia tion Act of 1990'.

(b) AMENDMENT OF 1986 CODE- Except as otherwise expressly provided, whenever in this title an amendment or repeal is expressed in terms of an amend ment to, or repeal of, a section or other provision, the reference shall be cons idered to be made to a section or other provision of the Internal Revenue Code o f 1986.

(c) TABLE OF CONTENTS-

Subtitle A--1-Year Extension of Certain Expiring Tax Provisions< /h3>
Sec. 7101. Allocation of research and experimental expenditures.

Sec. 7102. Research credit.

Sec. 7103. Employer-provided educational assistance.

Sec. 7104. Group legal services plans.

Sec. 7105. Targeted jobs credit.

Sec. 7106. Energy investment credit for solar, geothermal, and oc ean thermal property.

Sec. 7107. Low-income housing credit.

Sec. 7108. Qualified mortgage bonds.

Sec. 7109. Qualified small issue bonds.

Sec. 7110. Health insurance costs of self-employed individuals.

Sec. 7111. Expenses for drugs for rare conditions.

Subtitle B--Tax Incentives

Part I--Energy Incentives

Sec. 7201. Extension and modification of credit for producing fue l from nonconventional source.

Sec. 7202. Credit for small producers of ethanol; modification of alcohol fuels credit.

Sec. 7203. Tax credit to increase domestic energy exploration and production.

Sec. 7204. Percentage depletion permitted after transfer of prove n property.

Sec. 7205. Net income limitation on percentage depletion increase d from 50 percent to 100 percent of property net income for oil and natural gas wells.

Sec. 7206. Increase in percentage depletion allowance for margina l production.

Sec. 7207. Special energy deduction for minimum tax.

Sec. 7208. Reduce pollution and dependence on foreign oil.

Sec. 7208A. Resolution.

Part II--Small Business Incentives

SUBPART A--TREATMENT OF ESTATE TAX FREEZES

Sec. 7209. Repeal of section 2036(c).

Sec. 7210. Special valuation rules.

SUBPART B--ADDITIONAL INCENTIVES

Sec. 7211. Increase in limitation on expensing under section 179.

Sec. 7212. Credit for cost of providing nondiscriminatory public accommodations for disabled individuals.

Subtitle C--Modifications of Earned Income Tax Credit

Sec. 7301. Modifications of earned income tax credit.

Sec. 7302. Dependent care credit made refundable.

Sec. 7303. Study of advance payments.

Sec. 7304. Program to increase public awareness.

Sec. 7305. Exclusion from income and resources of earned income t ax credit under titles IV, XVI, and XIX of the Social Security Act.

Sec. 7306. Coordination with refund provision.

Subtitle D--Revenue-Raising Provisions

Part I--Excise Taxes

SUBPART A--TAXES RELATED TO HEALTH AND THE ENVIRONMENT

Sec. 7401. Increase in excise taxes on distilled spirits, wine, a nd beer.

Sec. 7402. Increase in excise taxes on tobacco products.

Sec. 7403. Additional chemicals subject to tax on ozone-depleting chemicals.

SUBPART B--USER-RELATED TAXES

Sec. 7405. Increase and extension of highway-related taxes and tr ust fund.

Sec. 7405A. Increase and extension of aviation-related taxes and trust fund; repeal of reduction in rates.

Sec. 7406. Increase in harbor maintenance tax.

Sec. 7407. Extension of Leaking Underground Storage Tank Trust Fu nd taxes.

Sec. 7408. Floor stocks tax treatment of articles in foreign trad e zones.

SUBPART C--TAXES ON LUXURY ITEMS

Sec. 7409. Taxes on luxury items.

SUBPART D--TELEPHONE TAX

Sec. 7410. Permanent extension of telephone excise tax.

Part II--Insurance Provisions

SUBPART A--PROVISIONS RELATED TO POLICY ACQUISITION COSTS

Sec. 7411. Capitalization of policy acquisition expenses.

Sec. 7412. Treatment of certain nonlife reserves of life insuranc e companies.

Sec. 7413. Treatment of life insurance reserves of insurance comp anies which are not life insurance companies.

SUBPART B--TREATMENT OF SALVAGE RECOVERABLE

Sec. 7414. Treatment of salvage recoverable.

SUBPART C-WAIVER OF ESTIMATED TAX PENALTIES

Sec. 7415. Waiver of estimated tax penalties.

Part III--Compliance Provisions

Sec. 7421. Suspension of statute of limitations during proceeding s to enforce certain summonses.

Sec. 7422. Accuracy-related penalty to apply to section 482 adjus tments.

Sec. 7423. Treatment of persons providing services.

Sec. 7424. Application of amendments made by section 7403 of Reve nue Reconciliation Act of 1989 to taxable years beginning on or before July 10, 1989.

Sec. 7425. Other reporting requirements.

Sec. 7426. Study of section 482.

Part IV--Employer Reversions

SUBPART A--TREATMENT OF REVERSIONS OF QUALIFIED PLAN ASSETS TO EMPLOY ERS

Sec. 7431. Increase in reversion tax.

Sec. 7432. Additional tax if no replacement plan.

Sec. 7433. Effective date.

SUBPART B--TRANSFERS TO RETIREE HEALTH ACCOUNTS

Sec. 7434. Transfer of excess pension assets to retiree health ac counts.

Sec. 7435. Application of ERISA to transfers of excess pension as sets to retiree health accounts.

Part V--Corporate Provisions

Sec. 7441. Recognition of gain by distributing corporation in cer tain section 355 transactions.

Sec. 7442. Modifications to regulations issued under section 305( c).

Sec. 7443. Modifications to section 1060.

Sec. 7444. Modification to corporation equity reduction limitatio ns on net operating loss carrybacks.

Sec. 7445. Issuance of debt or stock in satisfaction of indebtedn ess.

Part VI--Employment Tax Provisions

Sec. 7451. Increase in dollar limitation on amount of wages subje ct to hospital insurance tax.

Sec. 7452. Extending Medicare coverage of, and application of hos pital insurance tax to, all State and local government employees.

Sec. 7453. Coverage of certain state and local employees under so cial security.

Sec. 7454. Extension of FUTA surtax.

Sec. 7455. Increase in tier 2 railroad retirement taxes.

Sec. 7456. Transfer to railroad retirement account.

Sec. 7457. Tier 1 railroad retirement tax rates explicitly determ ined by reference to social security taxes.

Sec. 7458. Deposits of payroll taxes.

Part VII--Miscellaneous Provisions

Sec. 7461. Overall limitation on itemized deductions.

Sec. 7462. Disallowance of deduction for interest on unpaid corpo rate taxes.

Sec. 7463. Denial of deduction for unnecessary cosmetic surgery.

Subtitle E--Other Provisions

Sec. 7471. Tax-related user fees made permanent.

Sec. 7472. Public debt limit extension.

Sec. 7473. Reports of refunds and credits.

Subtitle A--1-Year Extension of Certain Expiring Tax Provisions< /h4>
SEC. 7101. ALLOCATION OF RESEARCH AND EXPERIMENTAL EXPENDITURES.

(a) EXTENSION- Paragraph (5) of section 864(f) (relating to allocat ion of research and experimental expenditures) is amended to read as follows:

`(5) YEARS TO WHICH RULE APPLIES- This subsection shall apply t o the taxpayer's first two taxable years beginning after August 1, 1989, and on or before August 1, 1991.'

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall appl y to taxable years beginning after August 1, 1989.

SEC. 7102. RESEARCH CREDIT.

(a) EXTENSION- Subsection (h) of section 41 (relating to credit for increasing research activities) is amended--

(1) by striking `December 31, 1990' each place it appears and i nserting `December 31, 1991', and

(2) by striking `January 1, 1991' each place it appears and ins erting `January 1, 1992'.

(b) CONFORMING AMENDMENTS-

(1) Subsection (a) of section 7110 of the Revenue Reconciliatio n Act of 1989 is amended by striking paragraph (2).

(2) Subparagraph (D) of section 28(b)(1) is amended by striking `December 31, 1990' and inserting `December 31, 1991'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 1989.

SEC. 7103. EMPLOYER-PROVIDED EDUCATIONAL ASSISTANCE.

(a) IN GENERAL- Subsection (d) of section 127 (relating to educatio nal assistance programs) is amended by striking `September 30, 1990' and inserti ng `December 31, 1991'.

(b) REPEAL OF LIMITATION ON GRADUATE LEVEL ASSISTANCE- Section 127( c)(1) is amended by striking the last sentence.

(c) CONFORMING AMENDMENT- Subsection (a) of section 7101 of the Rev enue Reconciliation Act of 1989 is amended by striking paragraph (2).

(d) EFFECTIVE DATES-

(1) IN GENERAL- Except as provided in paragraph (2), the amendm ents made by this section shall apply to taxable years beginning after December 31, 1989.

(2) SUBSECTION (b)- The amendment made by subsection (b) shall apply to taxable years beginning after December 31, 1990.

SEC. 7104. GROUP LEGAL SERVICES PLANS.

(a) IN GENERAL- Subsection (e) of section 120 (relating to amounts received under qualified group legal services plans) is amended by striking `Sep tember 30, 1990' and inserting `December 31, 1991'.

(b) CONFORMING AMENDMENT- Subsection (a) of section 7102 of the Rev enue Reconciliation Act of 1989 is amended by striking paragraph (2).

(c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 1989.

SEC. 7105. TARGETED JOBS CREDIT.

(a) IN GENERAL- Paragraph (4) of section 51(c) is amended by striki ng `September 30, 1990' and inserting `December 31, 1991'.

(b) AUTHORIZATION- Paragraph (2) of section 261(f) of the Economic Recovery Act of 1981 is amended by striking `fiscal year 1982' and all that foll ows through `necessary' and inserting `each fiscal year such sums as may be nece ssary'.

(c) EFFECTIVE DATES-

(1) CREDIT- The amendment made by subsection (a) shall apply to individuals who begin work for the employer after September 30, 1990.

(2) AUTHORIZATION- The amendment made by subsection (b) shall a pply to fiscal years beginning after 1990.

SEC. 7106. ENERGY INVESTMENT CREDIT FOR SOLAR, GEOTHERMAL, AND OCEAN THERMAL PROPERTY.

The table contained in section 46(b)(2)(A) (relating to energy perc entage) is amended by striking `Sept. 30, 1990' in clauses (viii), (ix), and (x) and inserting `Dec. 31, 1991'.

SEC. 7107. LOW-INCOME HOUSING CREDIT.

(a) EXTENSION-

(1) IN GENERAL- Subsection (o) of section 42 (relating to low-i ncome housing credit) is amended--

(A) by striking `1990' each place it appears in paragraph ( 1) and inserting `1991', and

(B) by striking paragraph (2) and inserting the following n ew paragraph:

`(2) EXCEPTION FOR BOND-FINANCED BUILDINGS IN PROGRESS- For pur poses of paragraph (1)(B), a building shall be treated as placed in service befo re 1992 if--

`(A) the bonds with respect to such building are issued bef ore 1992,

`(B) the taxpayer's basis in the project (of which the buil ding is a part) as of December 31, 1991, is more than 10 percent of the taxpayer 's reasonably expected basis in such project as of December 31, 1993, and

`(C) such building is placed in service before January 1, 1 994.'

(2) CONFORMING AMENDMENT- Subsection (a) of section 7108 of the Revenue Reconciliation Act of 1989 is amended by striking paragraph (2).

(3) EFFECTIVE DATE- The amendments made by this subsection shal l apply to calendar years after 1989.

(b) ADDITIONAL AMENDMENTS-

(1) CLARIFICATION OF TENANT RIGHTS OF 1ST REFUSAL- Section 42(i ) is amended--

(A) by redesignating paragraph (8) as paragraph (7), and

(B) by striking `the tenants of such building' in such para graph and inserting `the tenants (in cooperative form or otherwise) or resident management corporation of such building or by a qualified nonprofit organization (as defined in subsection (h)(5)(C)) or government agency'.

(2) MONITORING NONCOMPLIANCE- Clause (iv) of section 42(m)(1)(B ) is amended to read as follows:

`(iv) which provides a procedure that the agency (or an agent or other private contractor of such agency) will follow in monitoring for noncompliance with the provisions of this section and in notifying the Internal Revenue Service of such noncompliance which such agency becomes aware of.'

(3) TREATMENT OF SECTION 515 RENTS- Subparagraph (B) of section 42(g)(2) is amended by striking `and' at the end of clause (ii), by striking th e period at the end of clause (iii) and inserting `, and', and by inserting afte r clause (iii) the following new clause:

`(iv) does not include any rental payment to the owner of the unit to the extent such owner pays an equivalent amount to the Farmers' H ome Administration under section 515 of the Housing Act of 1949.'

(4) QUALIFIED CENSUS TRACT DETERMINATIONS WHERE DATA NOT AVAILA BLE- Subclause (I) of section 42(d)(5)(C)(ii) is amended by adding at the end th ereof the following new sentence: `If the Secretary of Housing and Urban Develop ment determines that sufficient data for any period are not available to apply t his clause on the basis of census tracts, such Secretary shall apply this clause for such period on the basis of enumeration districts.'

(5) EXCEPTION TO CREDIT DENIAL FOR MODERATE REHABILITATION ASSI STANCE-

(A) IN GENERAL- Paragraph (2) of section 42(c) is amended b y adding at the end thereof the following new sentence: `Such term does not incl ude any building with respect to which moderate rehabilitation assistance is pro vided, at any time during the compliance period, under section 8(e)(2) of the Un ited States Housing Act of 1937 (other than assistance under the Stewart B. McKi nney Homeless Assistance Act of 1988 (as in effect on the date of the enactment of this sentence)).'

(B) CONFORMING AMENDMENT- Paragraph (1) of section 42(b) is amended by striking the last sentence.

(6) AFDC RECIPIENT STUDENTS NOT TO DISQUALIFY UNIT- Subparagrap h (D) of section 42(i)(3) is amended to read as follows:

`(D) CERTAIN STUDENTS NOT TO DISQUALIFY UNIT- A unit shall not fail to be treated as a low-income unit merely because it is occupied by an individual who is--

`(i) a student and receiving assistance under title IV of the Social Security Act, or

`(ii) enrolled in a job training program receiving assi stance under the Job Training Partnership Act or under other similar Federal, St ate, or local laws.'

(7) PASSIVE LOSS RULES NOT TO APPLY TO REHABILITATION CREDIT WI TH RESPECT TO LOW-INCOME CREDIT BUILDING-

(A) Subparagraph (C) of section 469(i)(3) is amended--

(i) by inserting before the period `or which is attribu table to the rehabilitation investment credit (within the meaning of section 48( o)) with respect to a building for which a credit is determined under section 42 for such year', and

(ii) by striking `CREDIT' in the heading and inserting `CREDIT AND FOR REHABILITATION CREDIT ON LOW-INCOME CREDIT BUILDING'.
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(B) Subparagraph (B) of section 469(i)(3) is amended by str iking `In the case' and inserting `Except as provided in subparagraph (C), in th e case'.

(8) INTERMEDIARY COSTS CONSIDERED AT EVALUATION STAGE-

(A) IN GENERAL- Subparagraph (B) of section 42(m)(2) is ame nded by striking `and' at the end of clause (i), by striking the period at the e nd of clause (ii) and inserting `, and', and by adding at the end thereof the fo llowing:

`(iii) the percentage of the housing credit dollar amou nt used for project costs other than the cost of intermediaries.
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Clause (iii) shall not be applied so as to impede the develop ment of projects in hard-to-develop areas.'

(B) CONFORMING AMENDMENT- Subparagraph (B) of section 42(m) (1) is amended by striking clause (ii) and by redesignating clauses (iii) and (i v) as clauses (ii) and (iii), respectively.

(9) 10-YEAR RULE NOT TO APPLY TO ACQUISITION OF CERTAIN SINGLE- FAMILY RESIDENCES- Clause (ii) of section 42(d)(2)(D) is amended by striking `or ' at the end of subclause (III), by striking the period at the end of subclause (IV) and inserting `, or', and by adding at the end thereof the following new su bclause:

`(V) of a single-family residence by any individual who owned and used such residence for no other purpose than as his principal re sidence.'

(10) APPLICATION OF NONPROFIT SET-ASIDE- Section 42(h)(5) is am ended--

(A) by inserting `own an interest in the project (directly or through a partnership) and' after `nonprofit organization is to' in subparagr aph (B),

(B) by striking `and' at the end of clause (i) of subparagr aph (C), by redesignating clause (ii) of such subparagraph as clause (iii), and by inserting after clause (i) of such subparagraph the following new clause:

`(ii) such organization is determined by the State hous ing credit agency not to be affiliated with or controlled by a for-profit organi zation; and',

(C) by inserting `ownership and' before `material participa tion' in subparagraph (D).

(11) EFFECTIVE DATES-

(A) IN GENERAL- Except as otherwise provided in this paragr aph, the amendments made by this subsection shall apply to--

(i) determinations under section 42 of the Internal Rev enue Code of 1986 with respect to housing credit dollar amounts allocated from S tate housing credit ceilings for calendar years after 1990, or

(ii) buildings placed in service after December 31, 199 0, to the extent paragraph (1) of section 42(h) of such Code does not apply to a ny building by reason of paragraph (4) thereof.

(B) TENANT RIGHTS, ETC- The amendments made by paragraphs ( 1), (6), and (9) shall take effect on the date of the enactment of this Act.

(C) MONITORING- With respect to the amendment made by parag raph (2), subparagraph (A) of this paragraph shall apply by substituting `1991' for `1990' each place it appears.

(D) PASSIVE LOSS-

(i) Except as provided in clause (ii), the amendments m ade by paragraph (7) shall apply to property placed in service after December 31 , 1990, in taxable years ending after such date.

(ii) In the case of a taxpayer who holds an indirect in terest in property described in clause (i), the amendments made by paragraph (7) shall apply only if such interest is acquired after December 31, 1990.

SEC. 7108. QUALIFIED MORTGAGE BONDS.

(a) IN GENERAL- Subparagraph (B) of section 143(a)(1) (defining qua lified mortgage bond) is amended by striking `September 30, 1990' each place it appears and inserting `December 31, 1991'.

(b) MORTGAGE CREDIT CERTIFICATES- Subsection (h) of section 25 (rel ating to interest on certain home mortgages) is amended by striking `September 3 0, 1990' and inserting `December 31, 1991'.

(c) RECAPTURE PROVISION- Paragraph (3)(A) of section 4005(h) of the Technical and Miscellaneous Revenue Act of 1988 (relating to effective dates) i s amended by striking `1990' and inserting `1991'.

(d) EFFECTIVE DATES-

(1) BONDS- The amendment made by subsection (a) shall apply to bonds issued after September 30, 1990.

(2) CERTIFICATES- The amendment made by subsection (b) shall ap ply to elections for periods after September 30, 1990.

SEC. 7109. QUALIFIED SMALL ISSUE BONDS.

(a) IN GENERAL- Subparagraph (B) of section 144(a)(12) (relating to termination dates) is amended by striking `September 30, 1990' and inserting `D ecember 31, 1991'.

(b) EFFECTIVE DATE- The amendment made by this section shall apply to bonds issued after September 30, 1990.

SEC. 7110. HEALTH INSURANCE COSTS OF SELF-EMPLOYED INDIVIDUALS.< /h3>
(a) IN GENERAL- Paragraph (6) of section 162(l) (relating to specia l rules for health insurance costs of self-employed individuals) is amended by s triking `September 30, 1990' and inserting `December 31, 1991'.

(b) CONFORMING AMENDMENT- Subsection (a) of section 7107 of the Rev enue Reconciliation Act of 1989 is amended by striking paragraph (2).

(c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 1989.

SEC. 7111. EXPENSES FOR DRUGS FOR RARE CONDITIONS.

(a) IN GENERAL- Subsection (e) of section 28 (relating to clinical testing expenses for certain drugs for rare diseases or conditions) is amended b y striking `December 31, 1990' and inserting `December 31, 1991'.

(b) CONFORMING AMENDMENT- Section 28(b)(1) is amended by striking s ubparagraph (D).

Subtitle B--Tax Incentives

PART I--ENERGY INCENTIVES

SEC. 7201. EXTENSION AND MODIFICATION OF CREDIT FOR PRODUCING FUEL FR OM NONCONVENTIONAL SOURCE.

(a) CREDIT MADE PERMANENT- Section 29(f)(1) of the Internal Revenue Code of 1986 (relating to application of section) is amended--

(1) by striking `and before January 1, 1991,' in clauses (i) an d (ii) of subparagraph (A), and

(2) by striking `, and before January 1, 2001' in subparagraph (B).

(b) Modification With Respect to Gas From Tight Formations-
(1) IN GENERAL- Subparagraph (B) of section 29(c)(2) of such Co de is amended to read as follows:

`(B) SPECIAL RULES FOR GAS FROM TIGHT FORMATIONS- The term `gas produced from a tight formation' shall only include gas from a tight format ion--

`(i) which, as of April 20, 1977, was committed or dedi cated to interstate commerce (as defined in section 2(18) of the Natural Gas Pol icy Act of 1978, as in effect on the date of the enactment of this clause), or

`(ii) which is produced from a well drilled after such date of enactment.'

(2) EFFECTIVE DATE- The amendment made by paragraph (1) shall a pply to gas produced after December 31, 1990.

SEC. 7202. CREDIT FOR SMALL PRODUCERS OF ETHANOL; MODIFICATION OF ALC OHOL FUELS CREDIT.

(a) ALLOWANCE OF CREDIT- Section 40(a) (relating to alcohol used as fuel) is amended--

(1) by striking the end period in paragraph (2) and inserting ` , plus', and

(2) by adding at the end thereof the following new paragraph:

`(3) in the case of an eligible small ethanol producer, the sma ll ethanol producer credit.'

(b) SMALL ETHANOL PRODUCER CREDIT- Subsection (b) of section 40 is amended--

(1) by redesignating paragraph (4) as paragraph (5),
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(2) by inserting after paragraph (3) the following new paragrap h:

`(4) SMALL ETHANOL PRODUCER CREDIT-

`(A) IN GENERAL- The small ethanol producer credit of any e ligible small ethanol producer for any taxable year is 10 cents for each gallon of qualified ethanol fuel production of such producer.

`(B) QUALIFIED ETHANOL FUEL PRODUCTION- For purposes of thi s paragraph, the term `qualified ethanol fuel production' means any alcohol whic h is ethanol which is produced by an eligible small ethanol producer, and which during the taxable year--

`(i) is sold by such producer to another person--< /ul>

`(I) for use by such other person in the production of a qualified mixture in such other person's trade or business (other than cas ual off-farm production),

`(II) for use by such other person as a fuel in a t rade or business, or

`(III) who sells such ethanol at retail to another person and places such ethanol in the fuel tank of such other person, or

`(ii) is used or sold by such producer for any purpose described in clause (i).

`(C) LIMITATION- The qualified ethanol fuel production of a ny producer for any taxable year shall not exceed 15,000,000 gallons.
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`(D) ADDITIONAL DISTILLATION EXCLUDED- The qualified ethano l fuel production of any producer for any taxable year shall not include any alc ohol which is purchased by the producer and with respect to which such person in creases the proof of the alcohol by additional distillation.'; and

(3) by striking `AND ALCOHOL CREDIT' in the heading for such su bsection and inserting `, ALCOHOL CREDIT, AND SMALL ETHANOL PRODUCER CREDIT'.

(c) DEFINITIONS AND SPECIAL RULES FOR ELIGIBLE SMALL ETHANOL PRODUC ER CREDIT- Section 40 is amended by adding at the end thereof the following new subsection:

`(g) DEFINITIONS AND SPECIAL RULES FOR ELIGIBLE SMALL ETHANOL PRODU CER CREDIT- For purposes of this section--

`(1) ELIGIBLE SMALL ETHANOL PRODUCER- The term `eligible small ethanol producer' means a person who, at all times during the taxable year, has a productive capacity for alcohol (as defined in subsection (d)(1)(A) without re gard to clauses (i) and (ii)) not in excess of 20,000,000 gallons.

`(2) AGGREGRATION RULE- For purposes of the 15,000,000 gallon l imitation under subsection (b)(4)(C) and the 20,000,000 gallon limitation under paragraph (1), all members of the same controlled group of corporations (within the meaning of section 267(f)) and all persons under common control (within the meaning of section 52(b) but determined by treating a 50 percent or greater inte rest as a controlling interest) shall be treated as 1 person.

`(3) PARTNERSHIP, S CORPORATIONS, AND OTHER PASS-THRU ENTITIES- In the case of a partnership, trust, S corporation, or other pass-thru entity, the limitations contained in subsection (b)(4)(C) shall be applied at the entity level and at the partner or similar level.

`(4) ALLOCATION- For purposes of this subsection, in the case o f a facility in which more than 1 person has an interest, productive capacity sh all be allocated among such persons in the same manner as production is allocate d.

`(5) REGULATIONS- The Secretary may prescribe such regulations as may be necessary--

`(A) to prevent the credit provided for in subsection (a)(3 ) from directly or indirectly benefiting any person with a direct or indirect pr oductive capacity of more than 20,000,000 gallons of alcohol during the taxable year, or

`(B) to prevent any person from directly or indirectly bene fiting with respect to more than 15,000,000 gallons during the taxable year.'

(d) ALCOHOL NOT USED AS FUEL-

(1) IN GENERAL- Section 40(d)(3) is amended by redesignating su bparagraph (C) as subparagraph (D) and by inserting after subparagraph (B) the f ollowing new subparagraph:

`(C) PRODUCER CREDIT- If--

`(i) any credit was determined under this section, and

`(ii) any person does not use such fuel for a purpose d escribed in subsection (b)(4)(B),

then there is hereby imposed on such person a tax equal to 10 cents a gallon for each gallon of such alcohol.'

(2) CONFORMING AMENDMENT- Section 40(d)(3)(D), as redesignated by paragraph (1), is amended by striking `subparagraph (A) or (B)' and inserting `subparagraph (A), (B), or (C)'.

(e) REDUCED CREDIT FOR ETHANOL BLENDERS-

(1) IN GENERAL- Section 40, as amended by subsection (c), is am ended by adding at the end thereof the following new subsection:

`(h) REDUCED CREDIT FOR ETHANOL BLENDERS- In the case of any alcoho l mixture credit or alcohol credit with respect to any alcohol which is ethanol- -

`(1) subsections (b)(1)(A) and (b)(2)(A) shall be applied by su bstituting `55 cents' for `60 cents';

`(2) subsection (b)(3) shall be applied by substituting `40 cen ts' for `45 cents' and `55 cents' for `60 cents'; and

`(3) subparagraphs (A) and (B) of subsection (d)(3) shall be ap plied by substituting `55 cents' for `60 cents' and `40 cents' for `45 cents'.'

(2) CONFORMING AMENDMENT- Section 40(b) is amended by inserting `, and except as provided in subsection (h)' in the matter preceding paragraph (1) thereof.

(f) TERMINATION- Subsection (e) of section 40 is amended to read as follows:

`(e) TERMINATION-

`(1) IN GENERAL- This section shall not apply to any sale or us e--

`(A) for any period after December 31, 2000, or

`(B) for any period before January 1, 2001, during which th e Highway Trust Fund financing rate under section 4081(a)(2) is not in effect.

`(2) NO CARRYOVERS TO CERTAIN YEARS AFTER EXPIRATION- If this s ection ceases to apply for any period by reason of paragraph (1), no amount attr ibutable to any sales or uses before the first day of such period may be carried under section 39 by reason of this section (treating the amount allowed by reas on of this section as the first amount allowed by this subpart) to any taxable y ear beginning after the second taxable year beginning after the taxable year in which such first day occurs.'

(g) CONFORMING AMENDMENTS TO TARIFF SCHEDULE-

(1) Heading 9901.00.50 of the Harmonized Tariff Schedule of the United States (19 U.S.C. 3007) is amended--

(A) by striking `15.85.' each place it appears and insertin g `14.53.', and

(B) by striking out the date in the effective period column and inserting `Before 10/1/2000, except that the rate for articles described in this heading shall not apply during any period before 10/1/2000 during which th e Highway Trust Fund financing rate under section 4081(a)(2) of the Internal Rev enue Code of 1986 is not in effect.'

(2) Heading 9901.00.52 of the Harmonized Tariff Schedule of the United States is amended by striking out `The earlier of 12/31/92, or the date on which Treasury regulation 1.40-1 is withdrawn or declared invalid.' in the e ffective period column and inserting: `Before the earlier of 10/1/2000, or the d ate on which Treas. Reg. 1.40-1 is withdrawn or declared invalid, except that t he rate for articles described in this heading shall not apply during any period before 10/1/2000 during which the Highway Trust Fund financing rate under secti on 4081(a)(2) of the Internal Revenue Code of 1986 is not in effect.'
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(h) EFFECTIVE DATES-

(1) Except as provided in paragraph (2), the amendments made by this section shall apply to alcohol produced, and sold and used, in taxable yea rs beginning after December 31, 1990.

(2) The amendments made by subsection (g) shall apply to articl es entered or withdrawn from warehouse on or after January 1, 1991.

SEC. 7203. TAX CREDIT TO INCREASE DOMESTIC ENERGY EXPLORATION AND PRO DUCTION.

(a) IN GENERAL- Subpart D of part IV of subchapter A of chapter 1 ( relating to general business credits) is amended by adding at the end thereof th e following new section:

`SEC. 43. DOMESTIC ENERGY EXPLORATION AND PRODUCTION CREDIT.

`(a) GENERAL RULE- There shall be allowed as a credit against the t ax imposed by this chapter for any taxable year an amount equal to 15 percent of the sum of--

`(1) the qualified enhanced oil recovery costs, plus
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`(2) the qualified exploratory costs,

of the taxpayer for such taxable year.

`(b) PHASE-OUT OF CREDIT AS CRUDE OIL PRICES INCREASE-

`(1) IN GENERAL- The amount of the credit allowable under subse ction (a) shall be reduced by an amount which bears the same ratio to the amount of such credit (determined without regard to this paragraph) as--

`(A) the amount by which the reference price for the calend ar year preceding the calendar year in which the taxable year begins exceeds $28 , bears to

`(B) $6.

`(2) REFERENCE PRICE- For purposes of this subsection, the term `reference price' means, with respect to any calendar year, the reference price determined for such calendar year under section 29(d)(2)(C).

`(3) INFLATION ADJUSTMENT-

`(A) IN GENERAL- The $28 amount under paragraph (1)(A) for any taxable year beginning in a calendar year after 1991 shall be equal to the p roduct of--

`(i) $28, multiplied by

`(ii) the inflation adjustment factor for such calendar year.

`(B) INFLATION ADJUSTMENT FACTOR- The term `inflation adjus tment factor' means, with respect to any calendar year, a fraction the numerator of which is the GNP implicit price deflator for the preceding calendar year and the denominator of which is the GNP implicit price deflator for 1990. For purpo ses of the preceding sentence, the term `GNP implicit price deflator' means the first revision of the implicit price deflator for the gross national product as computed and published by the Secretary of Commerce. Not later than April 1 of a ny calendar year, the Secretary shall publish the inflation adjustment factor fo r the preceding calendar year.

`(4) CARRYBACKS AND CARRYFORWARDS- This subsection shall not ap ply to any carryback or carryforward to the taxable year under section 39.< /ul>

`(c) QUALIFIED COSTS- For purposes of this section--

`(1) QUALIFIED ENHANCED OIL RECOVERY COSTS-

`(A) IN GENERAL- The term `qualified enhanced oil recovery costs' means any of the following:

`(i) Any amount paid or incurred during the taxable yea r for tangible property--

`(I) which is an integral part of a qualified enhan ced oil recovery project, and

`(II) with respect to which depreciation (or amorti zation in lieu of depreciation) is allowable under this chapter.
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`(ii) Any intangible drilling and development costs--

`(I) which are paid or incurred in connection with a qualified enhanced oil recovery project, and

`(II) with respect to which the taxpayer may make a n election under section 263(c) for the taxable year.

`(iii) Any qualified tertiary injectant expenses which are paid or incurred in connection with a qualified enhanced oil recovery projec t and for which a deduction is allowable under section 193 for the taxable year.

`(B) QUALIFIED ENHANCED OIL RECOVERY PROJECT- For purposes of this paragraph--

`(i) IN GENERAL- The term `qualified enhanced oil recov ery project' means any project--

`(I) which involves the application (in accordance with sound engineering principles) of 1 or more tertiary recovery methods (as de fined in section 193(b)(3)) which can reasonably be expected to result in more t han an insignificant increase in the amount of crude oil which will ultimately b e recovered,

`(II) which is located within the United States (wi thin the meaning of section 638(1)), and

`(III) with respect to which the date on which the injection of liquids, gases, or other matter first begins is after December 31, 1990.

`(ii) CERTIFICATION- A project shall not be treated as a qualified enhanced oil recovery project unless the operator submits to the Sec retary (at such times and in such manner as the Secretary provides) a certificat ion from a petroleum engineer that the project meets (and continues to meet) the requirements of clause (i).

`(C) AT-RISK LIMITATION- For purposes of determining qualif ied enhanced oil recovery costs, rules similar to the rules of section 46(c)(8), section 46(c)(9), and section 47(d)(1) shall apply.

`(2) QUALIFIED EXPLORATORY COSTS-

`(A) IN GENERAL- The term `qualified exploratory costs' mea ns intangible drilling and development costs of a taxpayer other than an integra ted oil company which--

`(i) the taxpayer may elect to deduct as expenses under section 263(c), and

`(ii) are paid or incurred in connection with the drill ing of an exploratory well located in the United States (within the meaning of s ection 638(1)).

`(B) EXPLORATORY WELL- The term `exploratory well' means an y of the following oil or gas wells:

`(i) An oil or gas well which is completed (or if not c ompleted, with respect to which drilling operations cease) before the completion of any other well which--

`(I) is located within 1.25 miles from the well, an d

`(II) is capable of production in commercial quanti ties,

`(ii) An oil or gas well which is not described in clau se (i) but which has a completion depth which is at least 800 feet below the dee pest completion depth of any well within 1.25 miles which is capable of producti on in commercial quantities.

`(iii) An oil or gas well which is not described in cla use (i) or (ii) but which is completed into a new reservoir.

A well shall not be treated as an exploratory well unless the operator submits to the Secretary (at such time and in such manner as the Secre tary may provide) a certification from a petroleum engineer that the well is des cribed in one of the preceding clauses.

`(C) CERTAIN COSTS NOT INCLUDED- The term `qualified explor atory costs' shall not include any cost paid or incurred--

`(i) in constructing, acquiring, transporting, erecting , or installing an offshore platform, or

`(ii) after the installation of the production string o f casing begins.

`(D) INTEGRATED OIL COMPANY- For purposes of this paragraph , the term `integrated oil company' means, with respect to any taxable year, any producer of crude oil to whom subsection (c) of section 613A does not apply by reason of paragraph (2) or (4) of section 613A(d).

`(e) OTHER RULES-

`(1) DISALLOWANCE OF DEDUCTION- Any deduction allowable under t his chapter for any costs taken into account in computing the amount of the cred it allowed under subsection (a) shall be reduced by the amount of such credit at tributable to such costs.

`(2) BASIS ADJUSTMENTS- For purposes of this subtitle, if a cre dit is allowed under this section for any expenditure with respect to any proper ty, the increase in the basis of such property which would (but for this subsect ion) result from such expenditure shall be reduced by the amount of the credit s o allowed.'

(b) ADDITION TO GENERAL BUSINESS CREDIT-

(1) IN GENERAL- Section 38(b) (defining current year business c redit) is amended by striking `plus' at the end of paragraph (4), by striking th e period at the end of paragraph (5) and inserting `, plus', and by adding at th e end thereof the following new paragraph:

`(6) the domestic energy exploration and production credit unde r section 43(a).'

(2) CARRYBACKS- Section 39(d) is amended by adding at the end t hereof the following new paragraph:

`(5) NO CARRYBACK OF ENERGY EXPLORATION AND PRODUCTION CREDIT B EFORE 1991- No portion of the unused business credit for any taxable year which is attributable to the credit determined under section 43 (relating to domestic energy exploration and production credit) may be carried to a taxable year begin ning before January 1, 1991.'

(c) CONFORMING AMENDMENT- The table of sections for subpart D of pa rt IV of subchapter A of chapter 1 is amended by adding at the end thereof the f ollowing new item:

`Sec. 43. Domestic energy exploration and production credit.'
(d) EFFECTIVE DATES-

(1) IN GENERAL- The amendments made by this section shall apply to costs paid or incurred in taxable years beginning after December 31, 1990.

(2) SPECIAL RULE FOR SIGNIFICANT EXPANSION OF PROJECTS- For pur poses of section 43(c)(1)(B)(i)(III) of the Internal Revenue Code of 1986 (as ad ded by subsection (a)), any significant expansion after December 31, 1990, of a project begun before January 1, 1991, shall be treated as a new project begun af ter December 31, 1990.

SEC. 7204. PERCENTAGE DEPLETION PERMITTED AFTER TRANSFER OF PROVEN PR OPERTY.

(a) IN GENERAL- Subsection (c) of section 613A (relating to limitat ions on percentage depletion in the case of oil and gas wells) is amended by str iking paragraphs (9) and (10) and by redesignating paragraphs (11), (12), and (1 3) as paragraphs (9), (10), and (11), respectively.

(b) TECHNICAL AMENDMENT- Paragraph (11) of section 613A(c), as rede signated by subsection (a), is amended by striking subparagraphs (C) and (D).

(c) EFFECTIVE DATE- The amendments made by this section shall apply to transfers after October 11, 1990.

SEC. 7205. NET INCOME LIMITATION ON PERCENTAGE DEPLETION INCREASED FR OM 50 PERCENT TO 100 PERCENT OF PROPERTY NET INCOME FOR OIL AND NATURAL GAS WELL S.

(a) IN GENERAL- The second sentence of subsection (a) of section 61 3 (relating to percentage depletion) is amended by inserting `(100 percent in th e case of oil and gas properties)' after `50 percent'.

(b) CONFORMING AMENDMENTS-

(1) Subparagraph (C) of section 613A(c)(7) is amended by striki ng `50-percent' and inserting `taxable income'.

(2) Section 614(d) is amended by striking `50 percent' and inse rting `taxable income'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 1990.

SEC. 7206. INCREASE IN PERCENTAGE DEPLETION ALLOWANCE FOR MARGINAL PR ODUCTION.

(a) IN GENERAL- Paragraph (6) of section 613A(c) is amended to read as follows:

`(6) OIL AND NATURAL GAS RESULTING FROM MARGINAL PRODUCTION-

`(A) IN GENERAL- Except as provided in subsection (d) and s ubparagraph (B), the allowance for depletion under section 611 shall be computed in accordance with section 613 with respect to--

`(i) so much of the taxpayer's average daily marginal p roduction of domestic crude oil as does not exceed the taxpayer's depletable oil quantity (determined without regard to paragraph (3)(A)(ii)), and

`(ii) so much of the taxpayer's average daily marginal production of domestic natural gas as does not exceed the taxpayer's depletable natural gas quantity (determined without regard to paragraph (3)(A)(ii)),

and the applicable percentage shall be deemed to be specified in subsection (b) of section 613 for purposes of subsection (a) of that section .

`(B) ELECTION TO HAVE PARAGRAPH APPLY TO PRO RATA PORTION O F MARGINAL PRODUCTION- If the taxpayer elects to have this subparagraph apply fo r any taxable year, the rules of subparagraph (A) shall apply to the average dai ly marginal production of domestic crude oil or domestic natural gas of the taxp ayer to which paragraph (1) would have applied without regard to this paragraph.

`(C) APPLICABLE PERCENTAGE- For purposes of subparagraph (A ), the term `applicable percentage' means the percentage (not greater than 25 pe rcent) equal to the sum of--

`(i) 15 percent, plus

`(ii) 1 percentage point for each whole dollar by which $20 exceeds the reference price for crude oil for the calendar year preceding t he calendar year in which the taxable year begins.

For purposes of this paragraph, the term `reference price' me ans, with respect to any calendar year, the reference price determined for such calendar year under section 29(d)(2)(C).

`(D) MARGINAL PRODUCTION- The term `marginal production' me ans domestic crude oil or domestic natural gas which is--

`(i) produced during any taxable year from a well which is a stripper well for the calendar year in which the taxable year begins, or

`(ii) heavy oil.

`(E) STRIPPER WELL- For purposes of this paragraph, the ter m `stripper well' means, with respect to any calendar year, any well with respec t to which the average daily production of domestic crude oil or domestic natura l gas during such calendar year is 15 barrel equivalents or less.

`(F) HEAVY OIL- For purposes of this paragraph, the term `h eavy oil' means domestic crude oil produced from any property if such crude oil had a weighted average gravity of 20 degrees API or less (corrected to 60 degree s Fahrenheit).

`(G) AVERAGE DAILY MARGINAL PRODUCTION- For purposes of thi s subsection--

`(i) the taxpayer's average daily marginal production o f domestic crude oil or natural gas for any taxable year shall be determined by dividing the taxpayer's aggregate marginal production of domestic crude oil or n atural gas, as the case may be, during the taxable year by the number of days in such taxable year, and

`(ii) in the case of a taxpayer holding a partial inter est in the production from any property (including any interest held in any part nership), such taxpayer's production shall be considered to be that amount of su ch production determined by multiplying the total production of such property by the taxpayer's percentage participation in the revenues from such property.

`(H) ALLOCATION OF INCOME AND DEDUCTIONS- For purposes of a pplying any limitation based on taxable income from a property--
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`(i) such limitation shall be applied separately with r espect to marginal production and other production, and

`(ii) items of income deductions (and other appropriate items) shall be allocated to such production in proportion to gross income duri ng the taxable year from such production.'

(b) CONFORMING AMENDMENTS- Section 613A(c)(3)(A) is amended--< /ul>
(1) by striking clause (ii) and inserting:

`(ii) except in the case of a taxpayer making an electi on under paragraph (6)(B), the taxpayer's average daily marginal production for the taxable year.', and

(2) by striking the last sentence.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 1990.

SEC. 7207. SPECIAL ENERGY DEDUCTION FOR MINIMUM TAX.

(a) IN GENERAL- Section 56 (relating to adjustments in computing al ternative minimum taxable income) is amended by adding at the end thereof the fo llowing new subsection:

`(h) ADJUSTMENT BASED ON ENERGY PREFERENCES-

`(1) IN GENERAL- In computing the alternative minimum taxable i ncome of any taxpayer other than an integrated oil company for any taxable year beginning after 1990, there shall be allowed as a deduction an amount equal to t he lesser of--

`(A) the alternative tax energy preference deduction, or

`(B) 40 percent of alternative minimum taxable income deter mined without regard to the deduction allowable under this subsection and the al ternative tax net operating loss deduction under subsection (a)(4).

`(2) PHASE-OUT OF DEDUCTION AS OIL PRICES INCREASE- The amount of the deduction under paragraph (1) (determined without regard to this paragrap h) shall be reduced (but not below zero) by the amount which bears the same rati o to such amount as--

`(A) the excess of the reference price of crude oil for the calendar year preceding the calendar year in which the taxable year begins over $28, bears to

`(B) $6.

For purposes of this paragraph, the reference price for any calen dar year shall be determined under section 29(d)(3)(C) and the $28 amount under subparagraph (A) shall be adjusted at the same time and in the same manner as un der section 43(b)(3).

`(3) ALTERNATIVE TAX ENERGY PREFERENCE DEDUCTION- For purposes of paragraph (1), the term `alternative tax energy preference deduction' means a n amount equal to the sum of--

`(A) in the case of the intangible drilling cost preference , an amount equal to the sum of--

`(i) 75 percent of the portion of such preference attri butable to qualified exploratory costs, plus

`(ii) 15 percent of the excess (if any) of--
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`(I) such preference, over

`(II) the portion of such preference attributable t o qualified exploratory costs, plus

`(B) 50 percent of the marginal production depletion prefer ence.

`(4) INTANGIBLE DRILLING COST PREFERENCE- For purposes of this subsection--

`(A) IN GENERAL- The term `intangible drilling cost prefere nce' means the amount by which alternative minimum taxable income would be reduc ed if it were computed without regard to section 57(a)(2) and subsection (g)(4)( D)(i).

`(B) PORTION ATTRIBUTABLE TO QUALIFIED EXPLORATORY COSTS- F or purposes of subparagraph (A), the portion of the intangible drilling cost pre ference attributable to qualified exploratory costs is an amount which bears the same ratio to the intangible drilling cost preference as--

`(i) the qualified exploratory costs of the taxpayer fo r the taxable year, bear to

`(ii) the total intangible drilling and development cos ts with respect to which the taxpayer may make an election under section 263(c) for the taxable year.

`(5) MARGINAL PRODUCTION DEPLETION PREFERENCE- For purposes of this subsection, the term `marginal production depletion preference' means the a mount by which alternative minimum taxable income would be reduced if it were co mputed as if section 57(a)(1) and subsection (g)(4)(G) did not apply to any allo wance for depletion determined under section 613A(c)(6).

`(6) DEFINITIONS- For purposes of this subsection, any term use d in this subsection which is also used in section 43 shall have the same meanin g as when used in such section.

`(7) REGULATIONS- The Secretary may by regulation provide for a ppropriate adjustments in computing taxable income, alternative minimum taxable income, or adjusted current earnings for any taxable year following a taxable ye ar for which a deduction was allowed under this subsection to ensure that no dou ble benefit is allowed by reason of such deduction.'

(b) CONFORMING AMENDMENTS-

(1) Section 56(d)(1)(A) is amended to read as follows:

`(A) the amount of such deduction shall not exceed the exce ss (if any) of--

`(i) 90 percent of alternative minimum taxable income d etermined without regard to such deduction and the deduction under subsection ( h), over

`(ii) the deduction under subsection (h), and'.

(2) Section 59(a)(2)(A)(ii) is amended by inserting `and the al ternative tax energy preference deduction under section 56(h)' after `deduction' .

(c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 1990.

SEC. 7208. REDUCE POLLUTION AND DEPENDENCE ON FOREIGN OIL

(a) FINDINGS- The Congress finds and declares that--

(1) in order to have a comprehensive program to reduce pollutio n and reduce our dependence on foreign oil, it is important to coordinate progra ms relating to the production of automobiles and the production of fuels;

(2) the achievement of long-term energy security for the United States is essential to the health of the national economy, the well-being of ou r citizens, and the maintenance of national security;

(3) the displacement of energy derived from imported oil with a lternative fuels will help to achieve energy security and improve air quality;

(4) transportation uses account for more than 60 percent of the oil consumption of the Nation; and

(5) the Nation's security, economic, and environmental interest s require that the Federal Government should assist clean-burning, nonpetroleum transportation fuels to reach a threshold level of commercial application and co nsumer acceptability at which they can successfully compete with petroleum based fuels.

SEC. 7208A. RESOLUTION.

It is the sense of the Senate that it is in the national interest t o enhance energy security and promote environmental protection through the gradu al replacement of gasoline with cleaner, domestic nonpetroleum energy sources, a nd

The Secretary of Energy should analyze the potential of, and report to Congress on, the technical feasibility of replacing, by 1998 and 2005, ten p er cent and thirty per cent respectively, of our national transportation fuel wi th alternative and other domestic sources of energy.

PART II--SMALL BUSINESS INCENTIVES

Subpart A--Treatment of Estate Tax Freezes

SEC. 7209. REPEAL OF SECTION 2036(c).

(a) IN GENERAL- Section 2036 (relating to transfers with retained l ife estate) is amended by striking subsection (c) and by redesignating subsectio n (d) as subsection (c).

(b) CONFORMING AMENDMENTS-

(1) Section 2207B is amended--

(A) by striking subsection (b) and redesignating subsection s (c), (d), and (e) as subsections (b), (c), and (d), respectively,

(B) by striking `subsections (a) and (b)' in subsection (c) (as so redesignated) and inserting `subsection (a)', and

(C) by striking `subsections (a), (b), and (c)' in subsecti on (c) (as so redesignated) and inserting `subsections (a) and (b)'.

(2) Section 2501(d) is amended by striking paragraph (3).< /ul>

(c) EFFECTIVE DATE- The amendments made by this section shall apply in the case of property transferred after December 17, 1987.

SEC. 7210. SPECIAL VALUATION RULES.

(a) IN GENERAL- Subtitle B is amended by adding at the end thereof the following new chapter:

`Chapter 14--Special Valuation Rules

`Sec. 2701. Special valuation rules in case of transfers of certain inter ests in corporations or partnerships.
`Sec. 2702. Special valuation rules in case of transfers of interests in trusts.
`Sec. 2703. Certain rights and restrictions disregarded.
`Sec. 2704. Treatment of certain restrictions and lapsing rights.
`SEC. 2701. SPECIAL VALUATION RULES IN CASE OF TRANSFERS OF CERTAIN I NTERESTS IN CORPORATIONS OR PARTNERSHIPS.

`(a) VALUATION RULES-

`(1) IN GENERAL- Solely for purposes of determining whether a t ransfer of an interest in a corporation or partnership to (or for the benefit of ) a member of the transferor's family is a gift (and the value of such transfer) , the value of any right which is--

`(A) described in subparagraph (A) or (B) of subsection (c) (1), and

`(B) under any applicable retained interest that is retaine d by the transferor or an applicable family member immediately after the transfe r,

shall be treated as being zero.

`(2) EXCEPTIONS FOR MARKETABLE INTERESTS, ETC-

`(A) IN GENERAL- Paragraph (1) shall not apply to any right conferred by an applicable retained interest if--

`(i) market quotations are readily available (as of the date of the transfer) for such interest on an established securities market,

`(ii) such interest is of the same class as the transfe rred interest,

`(iii) such interest would be of the same class as the transferred interest but for nonlapsing differences in voting power (or, in the case of an interest in a partnership, nonlapsing differences with respect to man agement and limitations on liability), or

`(iv) such interest is proportionally the same as the t ransferred interest with respect to all rights other than voting power.

Clause (iii) shall not apply to any interest in a partnership if the transferor or an applicable family member has the right to alter the lia bility of the transferee of the transferred property. Except as provided by the Secretary, any difference described in clause (iii) which lapses by reason of St ate law shall be treated as a nonlapsing difference for purposes of such clause.

`(B) CUMULATIVE DISTRIBUTION RIGHTS- Paragraph (1) shall no t apply to a distribution right with respect to which the distributions are cumu lative and which has a preference upon liquidation, except that for purposes of determining the value of the retained interest to which such right relates, the determination as to whether the cumulative distributions can reasonably be expec ted to be timely paid shall be made without regard to whether the person retaini ng the interest possesses control over the entity.

`(3) MINIMUM VALUATION OF JUNIOR EQUITY-

`(A) IN GENERAL- In the case of a transfer described in par agraph (1) of a junior equity interest in a corporation or partnership, such int erest shall in no event be valued at an amount less than the value which would b e determined if the total value of all of the junior equity interests in the ent ity were equal to 10 percent of the sum of--

`(i) the total value of all of the equity interests in such entity, plus

`(ii) the total amount of indebtedness of such entity t o the transferor (or an applicable family member).

`(B) DEFINITIONS- For purposes of this paragraph--

`(i) JUNIOR EQUITY INTEREST- The term `junior equity in terest' means common stock or, in the case of a partnership, any partnership int erest under which the rights as to income and capital are junior to the rights r etained by the transferor.

`(ii) EQUITY INTEREST- The term `equity interest' means stock or any interest as a partner, as the case may be.

`(4) EXCEPTION FOR MARKETABLE TRANSFERRED INTERESTS- This subse ction shall not apply to the transfer of any interest in an entity if market quo tations are readily available (as of the date of the transfer) for such interest on an established securities market.

`(b) TRANSFER TAX TREATMENT OF CUMULATIVE BUT UNPAID DISTRIBUTIONS-

`(1) IN GENERAL- If a taxable event occurs with respect to any distribution right to which subsection (a)(1) does not apply by reason of subsec tion (a)(2)(B), the following shall be increased by the amount determined under paragraph (2):

`(A) The taxable estate of the transferor in the case of a taxable event described in paragraph (3)(A)(i).

`(B) The taxable gifts of the transferor for the calendar y ear in which the taxable event occurs in the case of a taxable event described i n paragraph (3)(A) (ii) or (iii).

`(2) AMOUNT OF INCREASE-

`(A) IN GENERAL- The amount of the increase determined unde r this paragraph shall be the excess (if any) of--

`(i) the value of the distributions payable during the period beginning on the date of the transfer under subsection (a)(1) and ending on the date of the taxable event determined as if--

`(I) all such distributions were paid on the date p ayment was due, and

`(II) all such distributions were reinvested by the transferor as of the date of payment at a yield equal to the discount rate used in determining the value of the applicable retained interest described in subse ction (a)(1), over

`(ii) the value of the distributions paid during such p eriod computed under clause (i) on the basis of the time when such distributions were actually paid.

`(B) Limitation on amount of increase-

`(i) IN GENERAL- The amount of the increase under subpa ragraph (A) shall not exceed the applicable percentage of the excess (if any) of --

`(I) the value of the junior equity interests in th e entity (determined as of the date of the taxable event), over

`(II) the value of such interests (determined as of the date of the transfer to which subsection (a)(1) applies).

`(ii) APPLICABLE PERCENTAGE- For purposes of clause (i) , the applicable percentage is the percentage determined by dividing--

`(I) the fair market value of the interests in the entity (other than junior equity interests) held by the transferor (determined a s of the date of the taxable event), by

`(II) the fair market value of all interests in the entity other than junior equity interests (determined as of such time).

`(iii) DEFINITIONS- For purposes of this subparagraph, the terms `junior equity interest' and `equity interest' have the meanings given such terms by subsection (a)(3)(B).

`(C) GRACE PERIOD- For purposes of subparagraph (A), any pa yment of any distribution during the 4-year period beginning on its due date sha ll be treated as having been made on such due date.

`(3) TAXABLE EVENTS- For purposes of this subsection--

`(A) IN GENERAL- The term `taxable event' means any of the following:

`(i) The death of the transferor if the applicable reta ined interest conferring the distribution right is includible in the estate of t he transferor.

`(ii) The transfer of such applicable retained interest .

`(iii) At the election of the taxpayer, the payment of any distribution after the period described in paragraph (2)(C), but only with r espect to the period ending on the date of such payment.

`(B) EXCEPTION WHERE SPOUSE IS TRANSFEREE-
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`(i) DEATHTIME TRANSFERS- Subparagraph (A)(i) shall not apply to any interest includible in the gross estate of the transferor if a ded uction with respect to such interest is allowable under section 2056 or 2106(a)( 3).

`(ii) LIFETIME TRANSFERS- A transfer to the spouse of t he transferor shall not be treated as a taxable event under subparagraph (A)(ii) if such transfer does not result in a taxable gift by reason of--

`(I) any deduction allowed under section 2523, or

`(II) consideration for the transfer provided by th e spouse.

`(iii) SPOUSE SUCCEEDS TO TREATMENT OF TRANSFEROR- If a n event is not treated as a taxable event by reason of this subparagraph, the tr ansferee spouse or surviving spouse (as the case may be) shall be treated in the same manner as the transferor in applying this subsection with respect to the interest involved.

`(4) SPECIAL RULES FOR APPLICABLE FAMILY MEMBERS-

`(A) FAMILY MEMBER TREATED IN SAME MANNER AS TRANSFEROR- Fo r purposes of this subsection, an applicable family member shall be treated in t he same manner as the transferor with respect to any distribution right retained by such family member to which subsection (a)(1) does not apply by reason of su bsection (a)(2)(B).

`(B) TRANSFER TO APPLICABLE FAMILY MEMBER- In the case of a taxable event described in paragraph (3)(A)(ii) involving the transfer of an ap plicable retained interest to an applicable family member, the applicable family member (other than the spouse of the transferor) shall be treated in the same m anner as the transferor in applying this subsection to distributions accumulatin g with respect to such interest after such taxable event.

`(5) TRANSFER TO INCLUDE TERMINATION- For purposes of this subs ection, any termination of an interest shall be treated as a transfer.

`(c) APPLICABLE RETAINED INTERESTS- For purposes of this section--

`(1) IN GENERAL- The term `applicable retained interest' means any interest in an entity which confers--

`(A) a distribution right, but only if, immediately after t he transfer described in subsection (a)(1), the transferor and applicable family members hold (after application of subsection (e)(3)) interests in such entity representing control of the entity, or

`(B) a liquidation, put, call, or conversion right.

`(2) CONTROL- For purposes of paragraph (1)--

`(A) CORPORATIONS- In the case of a corporation, the term ` control' means the holding of interests representing at least 50 percent (by vot e or value) of the stock of the corporation.

`(B) PARTNERSHIPS- In the case of a partnership, the term ` control' means--

`(i) the holding of interests representing at least 50 percent of the capital or profits interests in the partnership, or

`(ii) in the case of a limited partnership, the holding of any interest as a general partner.

`(d) DISTRIBUTION AND OTHER RIGHTS- For purposes of this section--

`(1) DISTRIBUTION RIGHT-

`(A) IN GENERAL- The term `distribution right' means--

`(i) in the case of a corporation, a right to distribut ions from the corporation with respect to its stock, and

`(ii) in the case of a partnership, a right to distribu tions from the partnership with respect to the partner's interest in the partner ship.

`(B) EXCEPTIONS- The term `distribution right' does not inc lude--

`(i) any junior equity interest (as defined in subsecti on (a)(3)(B)(i)),

`(ii) any liquidation, put, call, or conversion right, or

`(iii) any guaranteed payment described in section 707( c).

`(2) LIQUIDATION, ETC. RIGHTS-

`(A) IN GENERAL- The term `liquidation, put, call, or conve rsion right' means any liquidation, put, call, or conversion right, or any simil ar right, the exercise or nonexercise of which affects the value of the transfer red interest.

`(B) EXCEPTION FOR FIXED RIGHTS- The term `liquidation, put , call, or conversion right' does not include any liquidation, put, call, or con version right, or any similar right, which must be exercised at a specific time and at a specific amount.

`(C) TREATMENT OF CERTAIN RIGHTS TO CONVERT PREFERRED INTO COMMON- The term `liquidation, put, call, or conversion right' does not include any right which--

`(i) is a right to convert into a fixed number (or a fi xed percentage) of the same class of interest in a corporation as the transferre d interest in such corporation under subsection (a)(1) (or would be of the same class but for nonlapsing differences in voting power),

`(ii) is nonlapsing,

`(iii) is subject to proportionate adjustments for spli ts, combinations, reclassifications, and similar changes in the capital stock, a nd

`(iv) is subject to adjustments similar to the adjustme nts under subsection (b) for accumulated but unpaid distributions.

A rule similar to the rule of the preceding sentence shall ap ply in the case of partnerships.

`(e) OTHER DEFINITIONS AND RULES- For purposes of this section--

`(1) MEMBER OF THE FAMILY- The term `member of the family' mean s, with respect to any transferor--

`(A) the transferor's spouse,

`(B) a lineal descendant of the transferor or the transfero r's spouse, and

`(C) the spouse of any such descendant.

`(2) APPLICABLE FAMILY MEMBER- The term `applicable family memb er' means, with respect to any transferor--

`(A) the transferor's spouse,

`(B) an ancestor of the transferor or the transferor's spou se, and

`(C) the spouse of any such ancestor.

`(3) ATTRIBUTION RULES-

`(A) INDIRECT HOLDINGS- An individual shall be treated as h olding any interest to the extent such interest is held indirectly by such perso n through a corporation, partnership, trust, or other entity. If any individual is treated as holding any interest by reason of the preceding sentence, any tran sfer which results in such interest being treated as no longer held by such indi vidual shall be treated as a transfer of such interest.

`(B) CONTROL- For purposes of subsection (c)(1), an individ ual shall be treated as holding any interest held by a brother or a sister of su ch individual or by any lineal descendant of such individual.

`(4) EFFECT OF ADOPTION- A relationship by legal adoption shall be treated as a relationship by blood.

`(5) CERTAIN CHANGES TREATED AS TRANSFERS- Except as provided i n regulations, a redemption, recapitalization, contribution to capital, or other change in the capital structure of a corporation or partnership shall be treate d as a transfer of an interest in such entity to which this section applies if t he taxpayer or an applicable family member--

`(A) receives an applicable retained interest in such entit y pursuant to such redemption, recapitalization, contribution to capital, or oth er change, or

`(B) under regulations, otherwise holds, immediately after the transfer, an applicable retained interest in such entity.

`(6) ADJUSTMENTS- Under regulations prescribed by the Secretary , if there is any subsequent transfer, or inclusion in the gross estate, of any interest which was valued under the rules of subsection (a), appropriate adjustm ents shall be made for purposes of chapter 11 or 12 to reflect the amount of any prior taxable gift made by the transferor or decedent by reason of such valuati on.

`SEC. 2702. SPECIAL VALUATION RULES IN CASE OF TRANSFERS OF INTERESTS IN TRUSTS.

`(a) VALUATION RULES-

`(1) IN GENERAL- Solely for purposes of determining whether a t ransfer of an interest in a trust to a member of the transferor's family is a gi ft (and the value of such transfer), the value of any interest in such trust ret ained by the transferor or any applicable family member (as defined in section 2 701(e)(2)) shall be determined as provided in paragraph (2).

`(2) VALUATION OF RETAINED INTERESTS-

`(A) IN GENERAL- The value of any retained interest which i s not a qualified interest shall be treated as being zero.

`(B) VALUATION OF QUALIFIED INTEREST- The value of any reta ined interest which is a qualified interest shall be determined under section 75 20.

`(3) EXCEPTIONS-

`(A) IN GENERAL- This subsection shall not apply to any tra nsfer--

`(i) to the extent such transfer is an incomplete trans fer, or

`(ii) if such transfer involves the transfer of an inte rest in a trust all the property in which consists of a personal residence to be used by persons holding term interests in such trust.

`(B) INCOMPLETE TRANSFER- For purposes of subparagraph (A), the term `incomplete transfer' means any transfer which would not be treated as a gift whether or not consideration were received for such transfer.
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`(b) QUALIFIED INTEREST- For purposes of this section, the term `qu alified interest' means--

`(1) any interest which consists of the right to receive fixed amounts payable not less frequently than annually,

`(2) any interest which consists of the right to receive amount s which are payable not less frequently than annually and are a fixed percentage of the fair market value of the property in the trust (determined annually), an d

`(3) any noncontingent remainder interest if all of the other i nterests in the trust consist of interests described in paragraph (1) or (2).

`(c) CERTAIN PROPERTY TREATED AS HELD IN TRUST- For purposes of thi s section--

`(1) IN GENERAL- The transfer of an interest in property with r espect to which there is 1 or more term interests shall be treated as a transfer of an interest in a trust.

`(2) JOINT PURCHASES- If 2 or more members of the same family a cquire interests in any property described in paragraph (1) in the same transact ion (or a series of related transactions), the person (or persons) acquiring the term interests in such property shall be treated as having acquired the entire property and then transferred to the other persons the interests acquired by suc h other persons in the transaction (or series of transactions). Such transfer sh all be treated as made in exchange for the consideration (if any) provided by su ch other persons for the acquisition of their interests in such property.

`(3) TERM INTEREST- The term `term interest' means--
< /ul>
`(A) a life interest in property, or

`(B) an interest in property for a term of years.

`(4) VALUATION RULE FOR CERTAIN TERM INTERESTS- If the nonexerc ise of rights under a term interest in tangible property would not have a substa ntial effect on the valuation of the remainder interest in such property--< /ul>

`(A) subparagraph (A) of subsection (a)(2) shall not apply to such term interest, and

`(B) the value of such term interest for purposes of applyi ng subsection (a)(1) shall be the amount which the holder of the term interest e stablishes as the amount for which such interest could be sold to an unrelated t hird party.

`(d) TREATMENT OF TRANSFERS OF INTERESTS IN PORTION OF TRUST- In th e case of a transfer of an income or remainder interest with respect to a specif ied portion of the property in a trust, only such portion shall be taken into ac count in applying this section to such transfer.

`SEC. 2703. CERTAIN RIGHTS AND RESTRICTIONS DISREGARDED.

`(a) GENERAL RULE- For purposes of this subtitle, the value of any property shall be determined without regard to--

`(1) any option, agreement, or other right to acquire or use th e property at a price less than the fair market value of the property (without r egard to such option, agreement, or right), or

`(2) any restriction on the right to sell or use such property.

`(b) EXCEPTIONS- Subsection (a) shall not apply to any option, agre ement, right, or restriction which meets each of the following requirements:

`(1) It is a bona fide business arrangement.

`(2) It is not a device to transfer such property to members of the decedent's family for less than full and adequate consideration for money o r money's worth.

`(3) Its terms are comparable to similar arrangements entered i nto by persons in an arms' length transaction.

`SEC. 2704. TREATMENT OF CERTAIN RESTRICTIONS AND LAPSING RIGHTS.

`For purposes of this subtitle, the value of any property shall be determined--

`(1) without regard to any restriction other than a restriction which by its terms will never lapse, and

`(2) in the case of property includible in the gross estate of any decedent other than under section 2039, by assuming that any right which was held by such decedent with respect to such property and which effectively lapse d on the death of such decedent continues and can be exercised by the estate of such decedent.'

(b) EXTENSION OF STATUTE OF LIMITATIONS- Subsection (c) of section 6501 (relating to limitations on assessment and collection) is amended by adding at the end thereof the following new paragraph:

`(9) GIFT TAX ON CERTAIN GIFTS NOT SHOWN ON RETURN- If any gift of property the value of which is determined under section 2701 or 2702 (or any increase in taxable gifts required under section 2701(b)) is required to be sho wn on a return of tax imposed by chapter 12 (without regard to section 2503(b)), and is not shown on such return, any tax imposed by chapter 12 on such gift may be assessed, or a proceeding in court for the collection of such tax may be beg un without assessment, at any time. The preceding sentence shall not apply to an y item not shown as a gift on such return if such item is disclosed in such retu rn, or in a statement attached to the return, in a manner adequate to apprise th e Secretary of the nature of such item.'

(c) CONFORMING AMENDMENT- The table of chapters for subtitle B is a mended by adding at the end thereof the following item:

`Chapter 14. Special valuation rules.'

(d) STUDIES- The Secretary of the Treasury shall conduct a study of --

(1) the prevalence and type of options and agreements used to d istort the valuation of property for purposes of subtitle B of the Internal Reve nue Code of 1986, and

(2) other methods using discretionary rights to distort the val ue of property for such purposes.

The Secretary shall, not later than December 31, 1992, report the res ults of such study, together with such legislative recommendations as the Secret ary considers necessary, to the Committee on Finance of the Senate and the Commi ttee on Ways and Means of the House of Representatives.

(e) EFFECTIVE DATES-

(1) SUBSECTION (a)-

(A) IN GENERAL- The amendments made by subsection (a)--

(i) to the extent such amendments relate to sections 27 01 and 2702 of the Internal Revenue Code of 1986 (as added by such amendments), shall apply to transfers after October 8, 1990,

(ii) to the extent such amendments relate to section 27 03 of such Code (as so added), shall apply to--

(I) agreements, options, rights, or restrictions en tered into or granted after October 8, 1990, and

(II) agreements, options, rights, or restrictions w hich are substantially modified after October 8, 1990, and

(iii) to the extent such amendments relate to section 2 704 of such Code (as so added), shall apply to restrictions or rights (or limita tions on rights) created after October 8, 1990.

(B) EXCEPTION- For purposes of subparagraph (A)(i), with re spect to property transferred before October 9, 1990--

(i) any failure to exercise a right of conversion,

(ii) any failure to pay dividends, and

(iii) any failure to exercise other rights specified in regulations,

shall not be treated as a subsequent transfer.

(2) SUBSECTION (b)- The amendment made by subsection (b) shall apply to gifts after October 8, 1990.

Subpart B--Additional Incentives

SEC. 7211. INCREASE IN LIMITATION ON EXPENSING UNDER SECTION 179.

(a) GENERAL RULE- Paragraph (1) of section 179(b) (relating to doll ar limitation) is amended by striking `$10,000' and inserting `$14,000'.
(b) EFFECTIVE DATE- The amendment made by subsection (a) shall appl y to taxable years beginning after December 31, 1990.

SEC. 7212. CREDIT FOR COST OF PROVIDING NONDISCRIMINATORY PUBLIC ACCO MMODATIONS FOR DISABLED INDIVIDUALS.

(a) GENERAL RULE- Subpart B of part IV of subchapter A of chapter 1 (relating to foreign tax credits, etc.) is amended by adding at the end thereof the following new section:

`SEC. 30. EXPENDITURES TO PROVIDE NONDISCRIMINATORY PUBLIC ACCOMMODAT IONS TO DISABLED INDIVIDUALS.

`(a) GENERAL RULE- If an eligible small business elects to have thi s section apply to any taxable year, there shall be allowed as a credit against the tax imposed by this chapter for such taxable year an amount equal to 50 perc ent of so much of the eligible public accommodations access expenditures for the taxable year as exceed $250 but do not exceed $10,250.

`(b) LIMITATION BASED ON TAX LIABILITY- The credit allowed by subse ction (a) for any taxable year shall not exceed the excess (if any) of--
`(1) the regular tax for the taxable year reduced by the sum of the credits allowable under subpart A and any section in this subpart having a lower number or letter designation than this section, over

`(2) the tentative minimum tax for the taxable year.
< /ul>
`(c) CARRYBACK AND CARRYFORWARD OF UNUSED CREDIT-

`(1) IN GENERAL- If the amount of the credit allowable under su bsection (a) for any taxable year exceeds the limitation contained in subsection (b) (hereafter in this subsection referred to as the `unused credit year') such excess shall be--

`(A) a public accommodations credit carryback to each of th e 3 taxable years preceding the unused credit year, and

`(B) a public accommodations credit carryforward to each of the 15 taxable years following the unused credit year,

and shall be added to the credit allowable under subsection (a) f or such taxable year.

`(2) Amount carried to each year-

`(A) ENTIRE AMOUNT CARRIED TO FIRST YEAR- The entire amount of an unused credit year shall be carried to the earliest of the 18 taxable yea rs to which (by reason of paragraph (1)) such credit may be carried.

`(B) AMOUNT CARRIED TO OTHER 17 YEARS- The amount of the un used credit shall be carried to each of the other 17 taxable years to the extent that such unused credit may not be taken into account under subsection (a) by r eason of paragraph (3).

`(3) LIMITATION- The amount of the unused credit which may be a dded under paragraph (1) for any taxable year shall not exceed the amount by whi ch the limitation under subsection (b) exceeds the sum of--

`(A) the credit allowable under subsection (a) for such tax able year, plus

`(B) the amounts which, by reason of this subsection, are a dded to the amount allowed for such taxable year and which are attributable to t axable years preceding the unused credit year.

`(4) TAXABLE YEARS BEFORE DATE OF ENACTMENT- No public accommod ations credit may be carried back to a taxable year ending on or before the date of the enactment of this section.

`(d) ELIGIBLE SMALL BUSINESS- For purposes of this section, the ter m `eligible small business' means a person--

`(1) which has gross receipts for the preceding taxable year no t exceeding $4,000,000, or

`(2) in the case of a person with such receipts exceeding $4,00 0,000, which employs not more than 30 full-time employees during such preceding taxable year.

For purposes of paragraph (2), an employee shall be considered full-t ime if such employee is employed at least 30 hours per week for 20 or more calen dar weeks in the taxable year.

`(e) ELIGIBLE PUBLIC ACCOMMODATIONS ACCESS EXPENDITURES- For purpos es of this section--

`(1) IN GENERAL- The term `eligible public accommodations acces s expenditures' means amounts paid or incurred by the taxpayer--

`(A) for the purpose of removing architectural, communicati on, or transportation barriers which prevent a public accommodation operated by the taxpayer from being accessible to, or usable by, an individual with a disabi lity, or

`(B) for providing auxiliary aids and services to an indivi dual with a disability who is an employee of, or using, a public accommodation o perated by the taxpayer.

`(2) EXPENSES IN CONNECTION WITH NEW CONSTRUCTION ARE NOT ELIGI BLE- The term `eligible public accommodations access expenditures' shall not inc lude amounts described in paragraph (1)(A) which are paid or incurred in connect ion with any facility first placed in service after the date of the enactment of this section.

`(3) EXPENDITURES MUST MEET STANDARDS- The term `eligible publi c accommodations access expenditures' shall not include any amount unless the ta xpayer establishes, to the satisfaction of the Secretary, that the resulting rem oval of any barrier (or the provision of any auxiliary aids and services) meets the standards promulgated by the Secretary with the concurrence of the Architect ural and Transportation Barriers Compliance Board and set forth in regulations p rescribed by the Secretary.

`(f) OTHER DEFINITIONS AND SPECIAL RULES- For purposes of this sect ion--

`(1) DISABILITY, ETC- The terms `disability', `public accommoda tion', and `auxiliary aids and services' have the same respective meanings as wh en used in the Americans With Disabilities Act of 1990 (as in effect on the date of the enactment of this section).

`(2) Controlled groups-

`(A) IN GENERAL- All members of the same controlled group o f corporations (within the meaning of section 52(a)) and all persons under commo n control (within the meaning of section 52(b)) shall be treated as 1 person for purposes of this section.

`(B) DOLLAR LIMITATION- The Secretary shall apportion the d ollar limitation under subsection (a) among the members of any group described i n subparagraph (A) in such manner as the Secretary shall by regulations prescrib e.

`(3) PARTNERSHIPS AND S CORPORATIONS- In the case of a partners hip, the limitation under subsection (a) shall apply with respect to the partner ship and each partner. A similar rule shall apply in the case of an S corporatio n and its shareholders.

`(4) SHORT YEARS- The Secretary shall prescribe such adjustment s as may be appropriate for purposes of paragraphs (1) and (2) of subsection (d) if the preceding taxable year is a taxable year of less than 12 months.

`(5) GROSS RECEIPTS- Gross receipts for any taxable year shall be reduced by returns and allowances made during such year.

`(6) TREATMENT OF PREDECESSORS- The reference to any person in paragraphs (1) and (2) of subsection (d) shall be treated as including a referen ce to any predecessor.

`(7) DENIAL OF DOUBLE BENEFIT- In the case of any property with respect to which a credit amount is determined under this section--

`(A) any deduction or credit allowed under any other provis ion of this chapter shall be reduced by the amount of such credit, and

`(B) the adjusted basis of such property shall be reduced b y the amount of such credit.

`(g) REGULATIONS- The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section.'

(b) CLERICAL AMENDMENT- The table of sections for subpart B of part IV of subchapter A of chapter 1 is amended by adding at the end thereof other f ollowing new item:

`Sec. 30. Expenditures to provide nondiscriminatory public accommodations to disabled individuals.'
(c) DEDUCTION REDUCED FOR ARCHITECTURAL AND TRANSPORTATION BARRIER REMOVAL EXPENSES- Section 190(c) (relating to expenditures to remove architectur al and transportation barriers to the handicapped and elderly) is amended by str iking `$35,000' and inserting `$15,000'.

(d) EFFECTIVE DATE-

(1) IN GENERAL- Except as provided in paragraph (2), the amendm ents made by this section shall apply to expenditures made after the date of the enactment of this Act.

(2) SUBSECTION (c)- The amendment made by subsection (c) shall apply to taxable years beginning after the date of the enactment of this Act.

Subtitle C--Modifications of Earned Income Credit

SEC. 7301. MODIFICATIONS OF EARNED INCOME TAX CREDIT.

(a) IN GENERAL- So much of section 32 (relating to earned income cr edit) as precedes subsection (d) thereof is amended to read as follows:

`SEC. 32. EARNED INCOME.

`(a) ALLOWANCE OF CREDIT- In the case of an eligible individual, th ere shall be allowed as a credit against the tax imposed by this subtitle for th e taxable year an amount equal to the sum of--

`(1) the basic earned income credit, and

`(2) the health insurance credit.

`(b) COMPUTATION OF CREDIT- For purposes of this section--

`(1) Basic earned income credit-

`(A) IN GENERAL- The term `basic earned income credit' mean s an amount equal to the credit percentage of so much of the taxpayer's earned i ncome for the taxable year as does not exceed $5,714.

`(B) LIMITATION- The amount of the basic earned income cred it allowable to a taxpayer for any taxable year shall not exceed the excess (if any) of--

`(i) the credit percentage of $5,714, over

`(ii) the phaseout percentage of so much of the adjuste d gross income (or, if greater the earned income) of the taxpayer for the taxabl e year as exceeds $9,000.

`(C) PERCENTAGES- For purposes of this paragraph--

`(i) IN GENERAL- Except as provided in clause (ii), the percentages shall be determined as follows:

--------------------------------------------------------------------------- ----------------------------------------

`In the case of an eligible individual with: The credit per centage is: The phaseout percentage is:

--------------------------------------------------------------------------- ----------------------------------------

1 qualifying child 20.5 14.6

2 or more qualifying children 22.5 16.1

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`(ii) TRANSITION PERCENTAGES-

`(I) For taxable years beginning in 1991, the perce ntages are:

--------------------------------------------------------------------------- ----------------------------------------

`In the case of an eligible individual with: The credit per centage is: The phaseout percentage is:

--------------------------------------------------------------------------- ----------------------------------------

1 qualifying child 15.3 10.9

2 or more qualifying children 15.7 11.2

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`(II) For taxable years beginning in 1992, the perc entages are:

--------------------------------------------------------------------------- ----------------------------------------

`In the case of an eligible individual with: The credit per centage is: The phaseout percentage is:

--------------------------------------------------------------------------- ----------------------------------------

1 qualifying child 15.95 11.4

2 or more qualifying children 16.55 11.8

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`(III) For taxable years beginning in 1993, the per centages are:

--------------------------------------------------------------------------- ----------------------------------------

`In the case of an eligible individual with: The credit per centage is: The phaseout percentage is:

--------------------------------------------------------------------------- ----------------------------------------

1 qualifying child 17.25 12.3

2 or more qualifying children 18.25 13.0

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`(2) Health insurance credit-

`(A) IN GENERAL- The term `health insurance credit' means a n amount determined in the same manner as the basic earned income credit except that--

`(i) the credit percentage shall be equal to 5.5 percen t, and

`(ii) the phaseout percentage shall be equal to 3.9 per cent.

`(B) LIMITATION BASED ON HEALTH INSURANCE COSTS- The amount of health insurance credit determined under subparagraph (A) for any taxable ye ar shall not exceed the amounts paid by the taxpayer during the taxable year for insurance coverage--

`(i) which constitutes medical care (within the meaning of section 213(d)(1)(C)), and

`(ii) which includes at least 1 qualifying child.< /ul>

For purposes of this subparagraph, the rules of section 213(d )(6) shall apply.

`(C) SUBSIDIZED EXPENSES- A taxpayer may not take into acco unt under subparagraph (B) any amount to the extent that--

`(i) such amount is paid, reimbursed, or subsidized by the Federal Government, a State or local government, or any agency or instrument ality thereof; and

`(ii) the payment, reimbursement, or subsidy of such am ount is not includible in the gross income of the recipient.

`(D) ELECTION NOT TO TAKE CREDIT- A taxpayer may elect for any taxable year not to claim the health insurance credit.

`(E) TRANSITION RULES- In the case of taxable years beginni ng before 1994, the percentages under subparagraph (A) shall be determined as fo llows:

--------------------------------------------------------------------------- ---------------------------------------

`In the case of taxable years beginning in: The credit perc entage is: The phaseout percentage is:

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1991 1.1 0.8

1992 2.475 1.8

1993 2.5 1.8

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`(c) DEFINITIONS AND SPECIAL RULES- For purposes of this section--

`(1) Eligible individual-

`(A) IN GENERAL- The term `eligible individual' means any i ndividual who has a qualifying child for the taxable year.

`(B) QUALIFYING CHILD INELIGIBLE- If an individual is the q ualifying child of a taxpayer for any taxable year of such taxpayer beginning in a calendar year, such individual shall not be treated as an eligible individual for any taxable year of such individual beginning in such calendar year.

`(C) 2 OR MORE ELIGIBLE INDIVIDUALS- If 2 or more individua ls would (but for this subparagraph and after application of subparagraph (B)) b e treated as eligible individuals with respect to the same qualifying child for taxable years beginning in the same calendar year, only the individual with the highest adjusted gross income for such taxable years shall be treated as an elig ible individual with respect to such qualifying child.

`(D) EXCEPTION FOR INDIVIDUAL CLAIMING BENEFITS UNDER SECTI ON 911- The term `eligible individual' does not include any individual who claim s the benefits of section 911 (relating to citizens or residents living abroad) for the taxable year.

`(2) Earned income-

`(A) The term `earned income' means--

`(i) wages, salaries, tips, and other employee compensa tion, plus

`(ii) the amount of the taxpayer's net earnings from se lf-employment for the taxable year (within the meaning of section 1402(a)), but such net earnings shall be determined with regard to the deduction allowed to th e taxpayer by section 164(f).

`(B) For purposes of subparagraph (A)--

`(i) the earned income of an individual shall be comput ed without regard to any community property laws,

`(ii) no amount received as a pension or annuity shall be taken into account, and

`(iii) no amount to which section 871(a) applies (relat ing to income of nonresident alien individuals not connected with United States business) shall be taken into account.

`(3) Qualifying child-

`(A) IN GENERAL- The term `qualifying child' means, with re spect to any taxpayer for any taxable year, an individual--

`(i) who bears a relationship to the taxpayer described in subparagraph (B),

`(ii) except as provided in subparagraph (B)(iii), who has the same principal place of abode as the taxpayer for more than one-half of such taxable year,

`(iii) who meets the age requirements of subparagraph ( C), and

`(iv) with respect to whom the taxpayer meets the ident ification requirements of subparagraph (D).

`(B) Relationship test-

`(i) IN GENERAL- An individual bears a relationship to the taxpayer described in this subparagraph if such individual is--

`(I) a son or daughter of the taxpayer, or a descen dant of either,

`(II) a stepson or stepdaughter of the taxpayer, or

`(III) an eligible foster child of the taxpayer.

`(ii) MARRIED CHILDREN- Clause (i) shall not apply to a ny individual who is married as of the close of the taxpayer's taxable year unle ss the taxpayer is entitled to a deduction under section 151 for such taxable ye ar with respect to such individual (or would be so entitled but for paragraph (2 ) or (4) of section 152(e)).

`(iii) ELIGIBLE FOSTER CHILD- For purposes of clause (i )(III), the term `eligible foster child' means an individual not described in cl ause (i) (I) or (II) who--

`(I) the taxpayer cares for as the taxpayer's own c hild, and

`(II) has the same principal place of abode as the taxpayer for the taxpayer's entire taxable year.

`(iv) ADOPTION- For purposes of this subparagraph, a ch ild who is legally adopted, or who is placed with the taxpayer by an authorized placement agency for adoption by the taxpayer, shall be treated as a child by bl ood.

`(C) AGE REQUIREMENTS- An individual meets the requirements of this subparagraph if such individual--

`(i) has not attained the age of 19 as of the close of the calendar year in which the taxable year of the taxpayer begins,

`(ii) is a student (as defined in section 151(c)(4)) wh o has not attained the age of 24 as of the close of such calendar year, or< /ul>

`(iii) is permanently and totally disabled (as defined in section 22(e)(3)) at any time during the taxable year.

`(D) IDENTIFICATION REQUIREMENTS-

`(i) IN GENERAL- The requirements of this subparagraph are met if--

`(I) the taxpayer includes the name and age of each qualifying child (without regard to this subparagraph) on the return of tax for the taxable year, and

`(II) in the case of an individual who has attained the age of 1 year before the close of the taxpayer's taxable year, the taxpayer includes the taxpayer identification number of such individual on such return o f tax for such taxable year.

`(ii) INSURANCE POLICY NUMBER- In the case of any taxpa yer with respect to which the health insurance credit is allowed under subsectio n (a)(2), the Secretary may require a taxpayer to include an insurance policy nu mber or other adequate evidence of insurance in addition to any information requ ired to be included in clause (i).

`(iii) OTHER METHODS- The Secretary may prescribe other methods for providing the information described in clause (i) or (ii).

`(E) ABODE MUST BE IN THE UNITED STATES- The requirements o f subparagraphs (A)(ii) and (B)(iii)(II) shall be met only if the principal plac e of abode is in the United States.

`(4) COORDINATION WITH HOUSING PROGRAMS- For purposes of--

`(A) the United States Housing Act of 1937,
< /ul>
`(B) section 101 of the Housing and Urban Development Act o f 1965, and

`(C) section 235 and 236 of the National Housing Act,< /ul>

the term `income' does not include the amount of any individual's credit under this section.'

(b) ADVANCE PAYMENT OF CREDIT- Subparagraphs (B) and (C) of section 3507(c)(2) are amended to read as follows:

`(B) if the employee is not married, or if no earned income eligibility certificate is in effect with respect to the spouse of the employee , shall treat the credit provided by section 32 as if it were a credit--

`(i) of not more than the credit percentage under secti on 32(b)(1)(C) for an eligible individual with 1 qualifying child of earned inco me not in excess of the amount of earned income taken into account under section 32(a)(1), which

`(ii) phases out between the amount of earned income at which the phaseout begins under section 32(b)(1)(B)(ii) and the amount of incom e at which the credit under section 32(a)(1) phases out for an eligible individu al with 1 qualifying child, or

`(C) if an earned income eligibility certificate is in effe ct with respect to the spouse of the employee, shall treat the credit as if it w ere a credit determined under subparagraph (B) by substituting 1/2 of the amou nts of earned income described in such subparagraph for such amounts.'

(c) COORDINATION WITH DEDUCTIONS-

(1) MEDICAL DEDUCTION- Section 213(e) is amended to read as fol lows:

`(e) EXCLUSION OF AMOUNTS FOR WHICH CREDIT ALLOWED- For purposes of this section, any expenses with respect to which a credit is allowed under sect ion 21 or 32(a)(2) shall not be treated as an expense for medical care.'
(2) SELF-EMPLOYED INDIVIDUALS- Section 162(l), as amended by su btitle A, is amended by redesignating paragraph (6) as paragraph (7) and by inse rting after paragraph (5) the following new paragraph:

`(6) COORDINATION WITH HEALTH INSURANCE PREMIUM CREDIT- Paragra ph (1) shall not apply to any amount taken into account in computing the amount of the credit allowed under section 21.'.

(d) CONFORMING AMENDMENTS- Section 32(i)(2) is amended--

(1) by striking `or (ii)' in subparagraph (A)(1) thereof, and

(2) by striking clause (ii) of subparagraph (B) thereof and red esignating clause (iii) of subparagraph (B) thereof as clause (ii).

(e) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 1990.

SEC. 7302. DEPENDENT CARE CREDIT MADE REFUNDABLE.

(a) IN GENERAL- Section 21 is amended by redesignating subsection ( f) as subsection (g) and by inserting after subsection (e) the following new sub section:

`(f) Credit Refundable to Low and Moderate Income Taxpayers- < /ul>
`(1) IN GENERAL- Except as provided in section 6401(b)(3), for purposes of this title, in the case of an applicable taxpayer, the credit allowa ble under subsection (a) for any taxable year shall be treated as a credit allow able under subpart C of this part.

`(2) APPLICABLE TAXPAYER- For purposes of this subsection, the term `applicable taxpayer' means a taxpayer whose adjusted gross income for the taxable year does not exceed $28,000.

`(3) COORDINATION WITH MINIMUM TAX- A rule similar to the rule of section 32(h) shall apply with respect to the portion of any credit to which this subsection applies.'

(b) LIMITATION ON REFUNDABLE PORTION- Section 6401(b) is amended by adding at the end thereof the following new paragraph:

`(3) SPECIAL RULE FOR SECTION 21(F)-

`(A) IN GENERAL- The amount of the overpayment determined u nder paragraph (1) shall be reduced by 10 percent of the portion of such overpay ment attributable to the credit allowed under section 21 and treated as allowabl e under subpart C of part IV of subchapter A of chapter 1 by reason of section 2 1(f).

`(B) ORDERING RULE- For purposes of subparagraph (A), parag raph (1) shall be treated as having been applied as if the amount of tax describ ed in such paragraph (if any) was first reduced by the portion of the credit des cribed in paragraph (1).'

(c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 1990.

SEC. 7303. STUDY OF ADVANCE PAYMENTS.

(a) IN GENERAL- The Comptroller General of the United States shall, in consultation with the Secretary of the Treasury, conduct a study of advance payments required by section 3507 of the Internal Revenue Code of 1986 to determ ine--

(1) the effectiveness of the advance payment system (including an analysis of why so few employees take advantage of such system), and

(2) the manner in which such system can be implemented to allev iate administrative complexity, if any, for small business, and

(3) if there are any other problems in the administration of su ch system.

(b) REPORT- Not later than 1 year after the date of the enactment o f this title, the Comptroller shall report the results of the study conducted un der subsection (a), together with any recommendations, to the Committee on Finan ce of the United States Senate and the Committee on Ways and Means of the House of Representatives.

SEC. 7304. PROGRAM TO INCREASE PUBLIC AWARENESS.

Not later than the first day of the first calendar year following t he date of the enactment of this subtitle, the Secretary of the Treasury, or the Secretary's delegate, shall establish a taxpayer awareness program to inform th e taxpaying public of the availability of the credit for dependent care allowed under section 21 of the Internal Revenue Code of 1986 and the earned income cred it and child health insurance under section 32 of such Code. Such public awarene ss program shall be designed to assure that individuals who may be eligible are informed of the availability of such credit and filing procedures. The Secretary shall use public service and paid commercial advertising, direct-mail contact, and any other appropriate means of communication to carry out the provisions of this section.

SEC. 7305. EXCLUSION FROM INCOME AND RESOURCES OF EARNED INCOME TAX C REDIT UNDER TITLES IV, XVI, AND XIX OF THE SOCIAL SECURITY ACT.

(a) EXCLUSIONS UNDER TITLE IV- (1) Section 402(a)(7)(B) (42 U.S.C. 602(a)(7)(B)) is amended--

(1) by striking `or' before `(iii)'; and

(2) by inserting before the semicolon `,or (iv) for the month o f receipt and the following month any refund of Federal income taxes made to suc h family by reason of section 32 of the Internal Revenue Code of 1986 (relating to earned income credit), and any payment made to such family by an employer und er section 3507 of such Code (relating to advance payment of earned income credi t)'.

(2) Section 402(a)(18) (42 U.S.C. 602(a)(18)) is amended by inserti ng `or 8(A)(viii)' after `other than paragraph 8(A)(v)'.

(b) EXCLUSIONS UNDER TITLE XVI- (1) Section 1612(b) (42 U.S.C. 1382 a(b)), as amended by sections 6016 and 6017 of this Act, is further amended--

(A) by striking `and' at the end of paragraph (17);

(B) by striking the period at the end of paragraph (18) and ins erting `;and'; and

(C) by adding at the end the following new paragraph:

`(19) any refund of Federal income taxes made to such individual (o r such spouse) by reason of section 32 of the Internal Revenue Code of 1986 (rel ating to earned income tax credit), and any payment made to such individual (or such spouse) by an employer under section 3507 of such Code (relating to advance payment of earned income credit).'.

(2) Section 1613(a) (42 U.S.C. 1382b(a)), as amended by section 601 7 of this Act, is further amended--

(A) by striking `and' at the end of paragraph (8);

(B) by striking the period at the end of paragraph (9) and inse rting `;and'; and

(C) by adding at the end the following new paragraph:

`(10) for the month of receipt and the following month, any ref und of Federal income taxes made to such individual (or such spouse) by reason o f section 32 of the Internal Revenue Code of 1986 (relating to earned income tax credit), and any payment made to such individual (or such spouse) by an employe r under section 3507 of such Code (relating to advance payment of earned income credit).'.

(c) EXCLUSIONS UNDER TITLE XIX- Pursuant to section 1902(a)(17) of the Social Security Act (42 U.S.C. 1396a(a)(17)), the Secretary of Health and Hu man Services shall promulgate regulations to exempt from any determination of in come and resources (for the month of receipt and the following month) under titl e XIX of the Social Security Act any refund of Federal income taxes made to an i ndividual by reason of section 32 of the Internal Revenue Code of 1986 (relating to earned income tax credit), and any payment made to an individual by an emplo yer under section 3507 of such Code (relating to advance payment of earned incom e credit).

(d) AFDC WAIVER OF OVERPAYMENT- For the purposes of paragraph (18) of section 402(a) (42 U.S.C. 602(a)), a State agency designated under a State pl an under such section 402(a) may waive any overpayment of aid that resulted from the receipt by a family of a refund of Federal income taxes by reason of sectio n 32 of the Internal Revenue Code of 1986 (relating to earned income tax credit) or any payment made to such family by an employer under section 3507 of such Co de (relating to advance payment of earned income credit) during the period begin ning on December 1, 1989, and ending on January 1, 1990.

(d) EFFECTIVE DATE- The amendments made by subsections (a) though ( c) shall apply to determinations of income or resources made for any period afte r December 31, 1990.

SEC. 7306. COORDINATION WITH REFUND PROVISION.

For purposes of section 1324(b)(2) of title 31 of the United States Code, sections 21 and 32 of the Internal Revenue Code of 1986 (as amended by th is Act) shall be considered to be credit provisions of the Internal Revenue Code of 1954 enacted before January 1, 1978.

Subtitle D--Revenue-Raising Provisions

PART I--EXCISE TAXES

Subpart A--Taxes Related to Health and the Environment< /h2>
SEC. 7401. INCREASE IN EXCISE TAXES ON DISTILLED SPIRITS, WINE, AND B EER.

(a) DISTILLED SPIRITS-

(1) IN GENERAL- Paragraphs (1) and (3) of section 5001(a) (rela ting to rate of tax on distilled spirits) are each amended by striking `$12.50' and inserting `$13.70'.

(2) TECHNICAL AMENDMENT- Paragraphs (1) and (2) of section 5010 (a) (relating to credit for wine content and for flavors content) are each amend ed by striking `$12.50' and inserting `$13.70'.

(b) WINE-

(1) TAX INCREASES-

(A) WINES CONTAINING NOT MORE THAN 14 PERCENT ALCOHOL- Para graph (1) of section 5041(b) (relating to rates of tax on wines) is amended by s triking `17 cents' and inserting `$1.07'.

(B) WINES CONTAINING MORE THAN 14 (BUT NOT MORE THAN 21) PE RCENT ALCOHOL- Paragraph (2) of section 5041(b) is amended by striking `67 cents ' and inserting `$1.57'.

(C) WINES CONTAINING MORE THAN 21 (BUT NOT MORE THAN 24) PE RCENT ALCOHOL- Paragraph (3) of section 5041(b) is amended by striking `$2.25' a nd inserting `$3.15'.

(D) ARTIFICIALLY CARBONATED WINES- Paragraph (5) of section 5041(b) is amended by striking `$2.40' and inserting `$3.30'.

(2) CREDIT FOR SMALL DOMESTIC PRODUCERS- Section 5041 is amende d by redesignating subsections (c), (d), and (e) as subsections (d), (e), and (f ), respectively, and by inserting after subsection (b) the following new subsect ion:

`(c) CREDIT FOR SMALL DOMESTIC PRODUCERS-

`(1) ALLOWANCE OF CREDIT- Except as provided in paragraph (2), in the case of a person who produces not more than 250,000 wine gallons of wine during the calendar year, there shall be allowed as a credit against any tax imp osed by this title (other than chapters 2, 21, and 22) of 90 cents per wine gall on on the 1st 100,000 wine gallons of wine described in subsection (b) which are removed during such year for consumption or sale and which have been produced a t qualified facilities in the United States.

`(2) REDUCTION IN CREDIT- The credit allowable by paragraph (1) shall be reduced (but not below zero) by 1 percent for each 1,000 wine gallons of wine produced in excess of 150,000 wine gallons of wine during the calendar y ear.

`(3) TIME FOR DETERMINING AND ALLOWING CREDIT- The credit allow able by paragraph (1)--

`(A) shall be determined at the same time the tax is determ ined under subsection (a) of this section, and

`(B) shall be allowable at the time any tax described in pa ragraph (1) is payable as if the credit allowable by this subsection constituted a reduction in the rate of such tax.

`(4) CONTROLLED GROUPS- Rules similar to rules of section 5051( a)(2)(B) shall apply for purposes of this subsection.

`(5) DENIAL OF DEDUCTION- No deduction under chapter 1 shall be allowed with respect to any amount of tax reduced by a credit allowable under t his subsection.

`(6) REGULATIONS- The Secretary may prescribe such regulations as may be necessary to prevent the credit provided in this subsection from benef iting any person who produces more than 250,000 wine gallons of wine during a ca lendar year.

`(7) ALLOWANCE OF CREDIT AGAINST INCOME TAX- For allowance of c redit against the tax imposed by subtitle A, see section 30A.'

(3) CONFORMING AMENDMENTS-

(A) Subsection (a) of section 5041 is amended by striking ` shown in subsection (b)' and inserting `applicable under subsection (b) after th e application of subsection (c)'.

(B) Paragraph (3) of section 5061(b) is amended to read as follows:

`(3) section 5041(e),'.

(c) BEER-

(1) IN GENERAL- Paragraph (1) of section 5051(a) (relating to i mposition and rate of tax on beer) is amended by striking `$9' and inserting `$1 8'.

(2) CREDIT FOR SMALL DOMESTIC BREWERIES- Paragraph (2) of secti on 5051(a) is amended to read as follows:

`(2) CREDIT FOR SMALL DOMESTIC BREWERIES-

`(A) ALLOWANCE OF CREDIT- In the case of a brewer who produ ces not more than 75,000 barrels of beer during the calendar year, there shall b e allowed as a credit against any tax imposed by this title (other than chapters 2, 21, and 22) of $11 per barrel on the 1st 30,000 barrels of beer which are re moved in such year for consumption or sale and which have been brewed or produce d by such brewer at qualified breweries in the United States.

`(B) REDUCTION IN CREDIT- The credit allowable by subparagr aph (A) shall be reduced (but not below zero) by $11 for each barrel of beer bre wed or produced in excess of 45,000 barrels of beer during the calendar year.

`(C) TIME FOR DETERMINING AND ALLOWING CREDIT- The credit a llowable by subparagraph (A)--

`(i) shall be determined at the same time the tax is de termined under paragraph (1) of this subsection, and

`(ii) shall be allowable at the time any tax described in subparagraph (A) of this paragraph is payable as if the credit allowable by t his paragraph constituted a reduction in the rate of such tax.

`(D) CONTROLLED GROUPS- In the case of a controlled group, the 75,000 and 45,000 barrel quantities specified in subparagraphs (A) and (B) s hall be applied to the controlled group, and the 30,000 barrel quantity specifie d in subparagraph (A) shall be apportioned among the brewers who are component m embers of such group in such manner as the Secretary shall by regulations prescr ibe. For purposes of the preceding sentence, the term `controlled group' has the meaning assigned to it by subsection (a) of section 1563, except that for such purposes the phrase `more than 50 percent' shall be substituted for the phrase ` at least 80 percent' in each place it appears in such subsection. Under regulati ons prescribed by the Secretary, principles similar to the principles of the pre ceding 2 sentences shall be applied to a group of brewers under common control w here 1 or more of the brewers is not a corporation.

`(E) DENIAL OF DEDUCTION- No deduction under chapter 1 shal l be allowed with respect to any amount of tax reduced by a credit allowable und er this subsection.

`(F) REGULATIONS- The Secretary may prescribe such regulati ons as may be necessary to prevent the credit provided in this paragraph from be nefiting any person who produces more than 75,000 barrels of beer during a calen dar year.

`(G) ALLOWANCE OF CREDIT AGAINST INCOME TAX- For allowance of credit against the tax imposed by subtitle A, see section 30A.'

(d) ALLOWANCE OF CREDIT AGAINST INCOME TAX-

(1) IN GENERAL- Subpart B of part IV of subchapter A of chapter 1 (relating to foreign tax credit, etc.), as amended by section 7212, is furthe r amended by adding at the end thereof the following new section:

`SEC. 30A. SMALL DOMESTIC PRODUCERS OF WINE AND BEER.

`(a) GENERAL RULE- There shall be allowed as a credit against the t ax imposed by this subtitle for the taxable year an amount equal to the amount o f the credit allowed under section 5041(c) or 5051(a)(2) not otherwise taken as a credit against any other tax.

`(b) APPLICATION WITH OTHER CREDITS- The credit allowed by subsecti on (a) for any taxable year shall not exceed the excess (if any) of--

`(1) the regular tax for the taxable year reduced by the sum of the credits allowable under subpart A and any section in this subpart having a lower number or letter designation than this section, over

`(2) the tentative minimum tax for the taxable year.
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`(c) CARRYFORWARD OF UNUSED CREDIT- If the amount of the credit all owable under subsection (a) exceeds the limitations contained in subsection (b), such excess shall be carried to the succeeding taxable year (and subject to the limitations in subsection (b)) added to the credit allowable under subsection ( a) for such succeeding taxable year.'

(2) CONFORMING AMENDMENT- The table of sections for such subpar t A is amended by adding at the end thereof the following new item:

`Sec. 30A. Small domestic producers of wine and beer.'
(e) EFFECTIVE DATE- The amendments made by this section shall take effect on January 1, 1991.

(f) FLOOR STOCKS TAXES-

(1) IMPOSITION OF TAX-

(A) IN GENERAL- In the case of any tax-increased article--

(i) on which tax was determined under part I of subchap ter A of chapter 51 of the Internal Revenue Code of 1986 or section 7652 of such Code before January 1, 1991, and

(ii) which is held on such date for sale by any person,

there shall be imposed a tax at the applicable rate on each s uch article.

(B) APPLICABLE RATE- For purposes of subparagraph (A), the applicable rate is--

(i) $1.20 per proof gallon in the case of distilled spi rits,

(ii) 90 cents per wine gallon in the case of wine descr ibed in paragraph (1), (2), (3), or (5) of section 5041(b) of such Code, and

(iii) $9 per barrel in the case of beer.

In the case of a fraction of a gallon or barrel, the tax impo sed by subparagraph (A) shall be the same fraction as the amount of such tax imp osed on a whole gallon or barrel.

(C) TAX-INCREASED ARTICLE- For purposes of this subsection, the term `tax-increased article' means distilled spirits, wine described in par agraph (1), (2), (3), or (5) of section 5041(b) of such Code, and beer.

(2) EXCEPTION FOR SMALL DOMESTIC PRODUCERS- In the case of wine held by the producer thereof on January 1, 1991, if the rate of tax under secti on 5041 of such Code on such wine would have been determined after the applicati on of subsection (c) thereof (as added by this section) had the amendments made by subsection (b) applied to all wine removed during 1990, the rate of tax impos ed by paragraph (1) on such wine shall be the amount equal to the excess (if any ) of--

(A) the rate of tax which would have been so determined aft er the application of such subsection (c), over

(B) the rate of tax actually determined on such wine under section 5041 of such Code.

A similar rule shall apply to beer held by the producer thereof. For purposes of this paragraph, an article shall not be treated as held by the p roducer if title thereto had at any time been transferred to any other person.

(3) EXCEPTION FOR CERTAIN SMALL WHOLESALE OR RETAIL DEALERS- No tax shall be imposed by paragraph (1) on tax-increased articles held on January 1, 1991, by any dealer if--

(A) the aggregate liquid volume of tax-increased articles h eld by such dealer on such date does not exceed 500 wine gallons, and
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(B) such dealer submits to the Secretary (at the time and i n the manner required by the Secretary) such information as the Secretary shall require for purposes of this paragraph.

(4) CREDIT AGAINST TAX- Each dealer shall be allowed as a credi t against the taxes imposed by paragraph (1) an amount equal to--

(A) $288 to the extent such taxes are attributable to disti lled spirits,

(B) $270 to the extent such taxes are attributable to wine, and

(C) $87 to the extent such taxes are attributable to beer.

Such credit shall not exceed the amount of taxes imposed by parag raph (1) with respect to distilled spirits, wine, or beer, as the case may be, f or which the dealer is liable.

(5) LIABILITY FOR TAX AND METHOD OF PAYMENT-

(A) LIABILITY FOR TAX- A person holding any tax-increased a rticle on January 1, 1991, to which the tax imposed by paragraph (1) applies sha ll be liable for such tax.

(B) METHOD OF PAYMENT- The tax imposed by paragraph (1) sha ll be paid in such manner as the Secretary shall prescribe by regulations.< /ul>

(C) TIME FOR PAYMENT- The tax imposed by paragraph (1) shal l be paid on or before June 30, 1991.

(6) CONTROLLED GROUPS-

(A) CORPORATIONS- In the case of a controlled group--< /ul>

(i) the 500 wine gallon amount specified in paragraph ( 3), and

(ii) the $288, $270, and $87 amounts specified in parag raph (4),

shall be apportioned among the dealers who are component memb ers of such group in such manner as the Secretary shall by regulations prescribe . For purposes of the preceding sentence, the term `controlled group' has the me aning given to such term by subsection (a) of section 1563 of such Code; except that for such purposes the phrase `more than 50 percent' shall be substituted fo r the phrase `at least 80 percent' each place it appears in such subsection.

(B) NONINCORPORATED DEALERS UNDER COMMON CONTROL- Under reg ulations prescribed by the Secretary, principles similar to the principles of su bparagraph (A) shall apply to a group of dealers under common control where 1 or more of such dealers is not a corporation.

(7) OTHER LAWS APPLICABLE-

(A) IN GENERAL- All provisions of law, including penalties, applicable to the comparable excise tax with respect to any tax-increased artic le shall, insofar as applicable and not inconsistent with the provisions of this subsection, apply to the floor stocks taxes imposed by paragraph (1) to the sam e extent as if such taxes were imposed by the comparable excise tax.

(B) COMPARABLE EXCISE TAX- For purposes of subparagraph (A) , the term `comparable excise tax' means--

(i) the tax imposed by section 5001 of such Code in the case of distilled spirits,

(ii) the tax imposed by section 5041 of such Code in th e case of wine, and

(iii) the tax imposed by section 5051 of such Code in t he case of beer.

(8) DEFINITIONS- For purposes of this subsection--

(A) IN GENERAL- Terms used in this subsection which are als o used in subchapter A of chapter 51 of such Code shall have the respective mean ings such terms have in such part.

(B) PERSON- The term `person' includes any State or politic al subdivision thereof, or any agency or instrumentality of a State or political subdivision thereof.

(C) SECRETARY- The term `Secretary' means the Secretary of the Treasury or his delegate.

(9) TREATMENT OF IMPORTED PERFUMES CONTAINING DISTILLED SPIRITS - For purposes of this subsection, any article described in section 5001(a)(3) o f such Code shall be treated as distilled spirits; except that the tax imposed b y paragraph (1) shall be imposed on a wine gallon basis in lieu of a proof gallo n basis. To the extent provided by regulations prescribed by the Secretary, the preceding sentence shall not apply to any article held on January 1, 1991, on th e premises of a retail establishment.

SEC. 7402. INCREASE IN EXCISE TAXES ON TOBACCO PRODUCTS.

(a) CIGARS- Subsection (a) of section 5701 is amended--

(1) by striking `75 cents per thousand' in paragraph (1) and in serting `$1.125 per thousand (93.75 cents per thousand on cigars removed during 1991 or 1992)', and

(2) by striking `equal to' and all that follows in paragraph (2 ) and inserting `equal to--

`(A) 10.625 percent of the wholesale price but not more tha n $25 per thousand on cigars removed during 1991 or 1992, and

`(B) 12.75 percent of the wholesale price but not more than $30 per thousand on cigars removed after 1992.'

(b) CIGARETTES- Subsection (b) of section 5701 is amended--
(1) by striking `$8 per thousand' in paragraph (1) and insertin g `$12 per thousand ($10 per thousand on cigarettes removed during 1991 or 1992) ', and

(2) by striking `$16.80 per thousand' in paragraph (2) and inse rting `$25.20 per thousand ($21 per thousand on cigarettes removed during 1991 o r 1992)'.

(c) CIGARETTE PAPERS- Subsection (c) of section 5701 is amended by striking `1/2 cent' and inserting `0.75 cent (0.625 cent on cigarette papers rem oved during 1991 or 1992)'.

(d) CIGARETTE TUBES- Subsection (d) of section 5701 is amended by s triking `1 cent' and inserting `1.5 cents (1.25 cents on cigarette tubes removed during 1991 or 1992)'.

(e) SMOKELESS TOBACCO- Subsection (e) of section 5701 is amended--

(1) by striking `24 cents' in paragraph (1) and inserting `36 c ents (30 cents on snuff removed during 1991 or 1992)', and

(2) by striking `8 cents' in paragraph (2) and inserting `12 ce nts (10 cents on chewing tobacco removed during 1991 or 1992)'.

(f) PIPE TOBACCO- Subsection (f) of section 5701 is amended by stri king `45 cents' and inserting `67.5 cents (56.25 cents on pipe tobacco removed d uring 1991 or 1992)'.

(g) EFFECTIVE DATE- The amendments made by this section shall apply with respect to articles removed after December 31, 1990.

(h) FLOOR STOCKS TAXES ON TOBACCO PRODUCTS-

(1) IMPOSITION OF TAX- On articles described in section 5701 of the Internal Revenue Code of 1986 manufactured in or imported into the United S tates which are removed before any tax-increase date and held on such date for s ale by any person, there shall be imposed the following taxes:

(A) SMALL CIGARS- On cigars, weighing not more than 3 pound s per thousand, 18.75 cents per thousand.

(B) LARGE CIGARS- On cigars, weighing more than 3 pounds pe r thousand, 2.125 percent of the wholesale price but not more than $5 per thousa nd.

(C) SMALL CIGARETTES- On cigarettes, weighing not more than 3 pounds per thousand, $2 per thousand.

(D) LARGE CIGARETTES- On cigarettes weighing more than 3 po unds per thousand, $4.20 per thousand; except that, if more than 6 1/2 inches i n length, they shall be taxable at the rate prescribed for cigarettes weighing n ot more than 3 pounds per thousand, counting each 2 3/4 inches, or fraction the reof, of the length of each as one cigarette.

(E) CIGARETTE PAPERS- On each book or set of cigarette pape rs containing more than 25 papers, 0.125 cent for each 50 papers or fractional p art thereof; except that, if more than 6 1/2 inches in length, they shall be ta xable at the rate prescribed for cigarette papers, counting each 2 3/4 inches, or fraction thereof, of the length of each as one cigarette paper.

(F) CIGARETTE TUBES- On cigarette tubes, 0.25 cent for each 50 tubes or fractional part thereof; except that, if more than 6 1/2 inches in length, they shall be taxable at the rate prescribed for cigarette tubes, count ing each 2 3/4 inches, or fraction thereof, of the length of each as one cigare tte tube.

(G) SNUFF- On snuff, 6 cents per pound and a proportionate tax at the like rate on all fractional parts of a pound.

(H) CHEWING TOBACCO- On chewing tobacco, 2 cents per pound and a proportionate tax at the like rate on all fractional parts of a pound.

(I) PIPE TOBACCO- On pipe tobacco, 11.25 cents per pound an d a proportionate tax at the like rate on all fractional parts of a pound.'

(2) EXCEPTION FOR CERTAIN AMOUNTS OF CIGARETTES-

(A) IN GENERAL- No tax shall be imposed by paragraph (1) on cigarettes held on any tax-increase date by any person if--

(i) the aggregate number of cigarettes held by such per son on such date does not exceed 30,000, and

(ii) such person submits to the Secretary (at the time and in the manner required by the Secretary) such information as the Secretary s hall require for purposes of this subparagraph.

For purposes of this subparagraph, in the case of cigarettes measuring more than 6 1/2 inches in length, each 2 3/4 inches (or fraction the reof) of the length of each shall be counted as one cigarette.

(B) AUTHORITY TO EXEMPT CIGARETTES HELD IN VENDING MACHINES - To the extent provided in regulations prescribed by the Secretary, no tax shal l be imposed by paragraph (1) on cigarettes held for retail sale on any tax-incr ease date by any person in any vending machine. If the Secretary so provides wit h respect to any person, the Secretary may reduce the 30,000 amount in subparagr aph (A) and the $60 amount in paragraph (4) with respect to such person.

(3) EXCEPTION FOR ARTICLES OTHER THAN CIGARETTES- No tax shall be imposed by paragraph (1) on any article described in section 5701 of such Cod e (other than cigarettes) held on any tax-increase date by any person if the agg regate amount of such article held by such person on such date does not result i n a tax imposed by paragraph (1) of such article exceeding $60.

(4) CREDIT AGAINST TAX- Each person shall be allowed as a credi t against the taxes on each article imposed by paragraph (1) an amount equal to $60. Such credit shall not exceed the amount of taxes imposed by paragraph (1) f or which such person is liable. With respect to any article described in section 5701 of such Code (other than cigarettes), the Secretary may increase the dolla r amount of the credit allowed under this paragraph in the administration of thi s subsection.

(5 ) LIABILITY FOR TAX AND METHOD OF PAYMENT-

(A) LIABILITY FOR TAX- A person holding cigarettes on any t ax-increase date to which any tax imposed by paragraph (1) applies shall be liab le for such tax.

(B) METHOD OF PAYMENT- The tax imposed by paragraph (1) sha ll be paid in such manner as the Secretary shall prescribe by regulations.< /ul>

(C) TIME FOR PAYMENT- The tax imposed by paragraph (1) shal l be paid on or before the 1st June 30 following the tax-increase date.

(6) DEFINITIONS- For purposes of this subsection--

(A) TAX-INCREASE DATE- The term `tax-increase date' means J anuary 1, 1991, and January 1, 1993.

(B) OTHER DEFINITIONS- Terms used in this subsection which are also used in section 5702 of the Internal Revenue Code of 1986 shall have th e respective meanings such terms have in such section.

(C) SECRETARY- The term `Secretary' means the Secretary of the Treasury or his delegate.

(7) CONTROLLED GROUPS- Rules similar to the rules of section 74 01(f)(6) shall apply for purposes of this subsection.

(8) OTHER LAWS APPLICABLE- All provisions of law, including pen alties, applicable with respect to the taxes imposed by section 5701 of such Cod e shall, insofar as applicable and not inconsistent with the provisions of this subsection, apply to the floor stocks taxes imposed by paragraph (1), to the sam e extent as if such taxes were imposed by such section 5701.

SEC. 7403. ADDITIONAL CHEMICALS SUBJECT TO TAX ON OZONE-DEPLETING CHE MICALS.

(a) GENERAL RULE-

(1) The table set forth in section 4682(a)(2) (defining ozone-d epleting chemical) is amended by adding at the end thereof the following new ite ms:

`Carbon tetrachloride
--tetrachloromethane
Methyl chloroform
--1,1,1-trichloroethane
CFC-13
CF3Cl
CFC-111
C2FCl5
CFC-112
C2F2Cl4
CFC-211
C3FCl7
CFC-212
C3F2Cl6
CFC-213
C3F3Cl5
CFC-214
C3F4Cl4
CFC-215
C3F5Cl3
CFC-216
C3F6Cl2
CFC-217
C3F7Cl.'
(2) The table set forth in section 4682(b) is amended by adding at the end thereof the following new items:

`Carbon tetrachloride
1.1
Methyl chloroform
0.1
CFC-13
1.0
CFC-111
1.0
CFC-112
1.0
CFC-211
1.0
CFC-212
1.0
CFC-213
1.0
CFC-214
1.0
CFC-215
1.0
CFC-216
1.0
CFC-217
1.0.'
(b) SEPARATE APPLICATION OF EXPORT CREDIT LIMIT FOR NEWLY LISTED CH EMICALS- Paragraph (3) of section 4682(d) is amended by adding at the end thereo f the following new subparagraph:

`(C) SEPARATE APPLICATION OF LIMIT FOR NEWLY LISTED CHEMICA LS-

`(i) IN GENERAL- Subparagraph (B) shall be applied sepa rately with respect to newly listed chemicals and other chemicals.

`(ii) APPLICATION TO NEWLY LISTED CHEMICALS- In applyin g subparagraph (B) to newly listed chemicals--

`(I) subparagraph (B) shall be applied by substitut ing `1989' for `1986' each place it appears, and

`(II) clause (i)(II) thereof shall be applied by su bstituting for the regulations referred to therein any regulations (whether or n ot prescribed by the Secretary) which the Secretary determines are comparable to the regulations referred to in such clause with respect to newly listed chemica ls.

`(iii) NEWLY LISTED CHEMICAL- For purposes of this subp aragraph, the term `newly listed chemical' means any substance which appears in the table contained in subsection (a)(2) below Halon-2402.'
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(c) SEPARATE BASE TAX AMOUNT FOR NEWLY LISTED CHEMICALS- Subparagra phs (B) and (C) of section 4681(b)(1) are amended to read as follows:

`(B) BASE TAX AMOUNT-

`(i) INITIALLY LISTED CHEMICALS- The base tax amount fo r purposes of subparagraph (A) with respect to any sale or use during a calendar year before 1995 with respect to any ozone-depleting chemical other than a newl y listed chemical (as defined in section 4682(d)(3)(C)) is the amount determined under the following table for such calendar year:

Base Tax
`Calendar Year
Amount
1990 or 1991
$1.37
1992
1.67
1993 or 1994
2.65.
`(ii) NEWLY LISTED CHEMICALS- The base tax amount for p urposes of subparagraph (A) with respect to any sale or use during a calendar ye ar before 1996 with respect to any ozone-depleting chemical which is a newly lis ted chemical (as so defined) is the amount determined under the following table for such calendar year:

Base Tax
`Calendar Year
Amount
1991 or 1992
$1.37
1993
1.67
1994
3.00
1995
3.10.
`(C) BASE TAX AMOUNT FOR LATER YEARS- The base tax amount f or purposes of subparagraph (A) with respect to any sale or use of an ozone-depl eting chemical during a calendar year after the last year specified in the table under subparagraph (B) applicable to such chemical shall be the base tax amount for such last year increased by 45 cents for each year after such last year.'

(d) OTHER AMENDMENTS-

(1) The last sentence of section 4682(c)(2) is amended by inser ting `(other than methyl chloroform)' after `ozone-depleting chemical'.

(2) Paragraph (3) of section 4682(h) is amended by striking `Ap ril 1' and inserting `June 30'.

(e) EFFECTIVE DATE- The amendments made by this section shall apply to sales and uses after December 31, 1990.

(f) DEPOSITS FOR 1ST QUARTER OF 1991- No deposit of any tax imposed by subchapter D of chapter 38 of the Internal Revenue Code of 1986 on any subst ance treated as an ozone-depleting chemical by reason of the amendment made by s ubsection (a)(1) shall be required to be made before April 1, 1991.

Subpart B--User-Related Taxes

SEC. 7405. INCREASE AND EXTENSION OF HIGHWAY-RELATED TAXES AND TRUST FUND.

(a) INCREASE IN TAX ON GASOLINE-

(1) IN GENERAL- Subparagraph (A) of section 4081(a)(2) (relatin g to rate of tax) is amended--

(A) by striking `and' at the end of clause (i),

(B) by striking the period at the end of clause (ii) and in serting `, and', and

(C) by adding at the end thereof the following new clause:

`(iii) the deficit reduction rate.'

(2) RATES OF TAX- Subparagraph (B) of section 4081(a)(2) is ame nded--

(A) by striking `9 cents a gallon, and' and inserting `13.7 5 cents a gallon,',

(B) by striking the period at the end of clause (ii) and in serting `, and', and

(C) by adding at the end thereof the following new clause:

`(iii) the deficit reduction rate is 4.75 cents (5.25 cents in the case of gasohol containing ethanol) a gallon .'

(3) 15-CENT LIMIT ON TAX ON GASOLINE USED IN NONCOMMERCIAL AVIA TION-

(A) RATES OF TAX AFTER DECEMBER 31, 1990, AND BEFORE JULY 1 , 1991- Paragraph (3) of section 4041(c) is amended by striking `12 cents a gall on over the Highway Trust Fund financing rate' and inserting `15 cents a gallon over the sum of the Highway Trust Fund financing rate and the deficit reduction financing rate'.

(B) REFUND ON TAX-

(i) Section 6427 is amended by striking subsections (m) and (o) and by redesignating subsections (n), (p), (q), and (r) as subsections (m), (n), (o), and (p), respectively.

(ii) Subsection (o) of section 6427 (as redesignated by clause (i)) is amended to read as follows:

`(o) GASOLINE USED IN NONCOMMERCIAL AVIATION- Except as provided in subsection (k), if gasoline is used as a fuel in any aircraft in noncommercial aviation (as defined in section 4041(c)(2)), the Secretary shall pay (without in terest) to the ultimate purchaser of such gasoline an amount equal to the excess of the aggregate amount of tax paid under section 4081 on the gasoline so used over an amount equal to 15.1 cents (12.1 cents during December 1990) multiplied by the number of gallons of gasoline so used.'

(iii) Paragraph (1) of section 6427(i) is amended by st riking `or (q)' and inserting `or (o)'.

(iv) Clause (i) of section 6427(i)(2)(A) is amended by striking `and (q)' and inserting `and (o)'.

(v) The amendments made by this subparagraph shall take effect on December 1, 1990.

(C) REPEAL OF TAX AFTER JUNE 30, 1991-

(i) Subsection (c) of section 4041 is amended by striki ng paragraphs (2) and (3) and by redesignating paragraphs (4) and (5) as paragra phs (2) and (3), respectively.

(ii) Paragraph (3) of section 4041(c), as redesignated by clause (i) is amended by striking `paragraphs (1) and (2)' and inserting `par agraph (1)'.

(iii) Paragraph (2) of section 6421(f) is amended by st riking `section 4041(c)(4)' and inserting `section 4041(c)(2)'.

(iv) The amendments made by this subparagraph shall tak e effect on July 1, 1991.

(5) CONFORMING AMENDMENTS-

(A) Paragraph (1) of section 4081(c) is amended--

(i) by striking `applied by' and all that follows throu gh `in the case' and inserting `applied by substituting rates which are 10/9th o f the otherwise applicable rates under subsection (a)(2) in the case', and< /ul>

(ii) by adding at the end thereof the following: `For p urposes of this subsection, in the case of the Highway Trust Fund financing rate , the otherwise applicable rate is 7.75 cents a gallon.'

(B) Paragraph (2) of section 4081(c) is amended by striking `at a rate equivalent to 3 cents' and inserting `at a Highway Trust Fund financ ing rate equivalent to 7.75 cents'.

(C) Subparagraph (A) of section 9503(c)(2) is amended by ad ding at the end thereof the following new sentence:

`The amounts payable from the Highway Trust Fund under this s ubparagraph shall be determined by taking into account only the Highway Trust Fu nd financing rate applicable to any fuel.'

(6) RATES OF TAX FOR GASOLINE REMOVED AFTER NOVEMBER 30, 1990, AND BEFORE JANUARY 1, 1992- Section 4081 is amended by adding at the end thereof the following new subsection:

`(e) RATES OF TAX FOR GASOLINE REMOVED AFTER NOVEMBER 30, 1990, AND BEFORE JANUARY 1, 1992-

`(1) HIGHWAY TRUST FUND FINANCING RATES-

`(A) In the case of gasoline removed after November 30, 199 0, and before July 1, 1991--

`(i) subsection (a)(2)(B)(i) shall be applied by substi tuting `11 cents' for `13.75 cents', and

`(ii) subsection (c) shall be applied by substituting ` 5 cents' for `7.75 cents' each place it appears.

`(B) In the case of gasoline removed after June 30, 1991, a nd before January 1, 1992--

`(i) subsection (a)(2)(B)(i) shall be applied by substi tuting `13.5 cents' for `13.75 cents', and

`(ii) subsection (c) shall be applied by substituting ` 7.5 cents' for `7.75 cents' each place it appears.

`(2) DEFICIT REDUCTION RATE-

`(A) In the case of gasoline removed after November 30, 199 0, and before July 1, 1991, subsection (a)(2)(B)(iii) shall be applied by substi tuting `2 cents (2.5 cents in the case of gasohol containing ethanol)' for `4.75 cents (5.25 cents in the case of gasohol containing ethanol)'.

`(B) In the case of gasoline removed after June 30, 1991, a nd before January 1, 1992, subsection (a)(2)(B)(iii) shall be applied by substit uting `4.5 cents (5 cents in the case of gasohol containing ethanol)' for `4.75 cents (5.25 cents in the case of gasohol containing ethanol)'.'

(7) EFFECTIVE DATE- Except as otherwise provided in this subsec tion, the amendments made by this subsection shall apply to gasoline removed (as defined in section 4082 of the Internal Revenue Code of 1986) after November 30 , 1990.

(b) INCREASE IN OTHER TAXES-

(1) DEFICIT REDUCTION RATE-

(A) Clause (i) of section 4091(b)(1)(A) is amended by inser ting `and the diesel fuel deficit reduction rate' after `financing rate'.

(B) Subsection (b) of section 4091 is amended by redesignat ing paragraphs (4) and (5) as paragraphs (5) and (6), respectively, and by inser ting after paragraph (3) the following new paragraph:

`(4) DIESEL FUEL DEFICIT REDUCTION RATE- For purposes of paragr aph (1), the diesel fuel deficit reduction rate is 4.75 cents a gallon (5.25 cen ts a gallon in the case of any mixture of diesel if at least 10 percent of such mixture is ethanol).'

(2) INCREASE IN HIGHWAY TRUST FUND FINANCING RATE- Paragraph (2 ) of section 4091(b) is amended by striking `15 cents' and inserting `19.75 cent s'.

(3) INCREASE IN TAX ON SPECIAL MOTOR FUELS- Paragraph (2) of se ction 4041(a) is amended by striking `of 9 cents a gallon' and by inserting at t he end thereof the following new sentence:

`The rate of the tax imposed by this paragraph shall be the sum o f the Highway Trust Fund financing rate and the deficit reduction rate in effect under section 4081 at the time of such sale or use.'

(4) 4.75-CENT TAX TO APPLY TO FUEL USED IN TRAINS-

(A) Paragraph (2) of section 4093(c) is amended by redesign ating subparagraph (B) as subparagraph (C) and by inserting after subparagraph ( A) the following new subparagraph:

`(B) 4.75-CENT TAX ON FUEL USED IN TRAINS- In the case of f uel sold for use in a diesel-powered train, with respect to the tax imposed by s ection 4091(b)(1)(A), paragraph (1) shall apply only to the excess of such tax o ver 4.75 cents per gallon. In the case of fuel sold for use after November 30, 1 990, and before July 1, 1991, the preceding sentence shall be applied by substit uting `2 cents' for `4.75 cents'; in the case of fuel sold for use after June 30 , 1991, and before January 1, 1992, the preceding sentence shall be applied by s ubstituting `4.5 cents' for `4.75 cents'.'

(B) Subsection (l) of section 6427 is amended by adding at the end thereof the following new paragraph:

`(4) 4.75-CENT TAX ON FUEL USED IN TRAINS- In the case of fuel used in a diesel-powered train, with respect to the tax imposed by section 4091( b)(1)(A), paragraph (1) shall apply only to the excess of such tax over 4.75 cen ts per gallon. In the case of fuel used after November 30, 1990, and before July 1, 1991, the preceding sentence shall be applied by substituting `2 cents' for `4.75 cents'; in the case of fuel used after June 30, 1991, and before January 1 , 1992, the preceding sentence shall be applied by substituting `4.5 cents' for `4.75 cents'.'

(C) Section 4041(a) is amended by redesignating paragraph ( 3) as paragraph (4) and by inserting after paragraph (2) the following new parag raph:

`(3) TAX ON DIESEL FUEL USED IN TRAINS- There is hereby imposed a tax of 4.75 cents a gallon on any liquid (other than any product taxable unde r section 4081)--

`(A) sold by any person to an owner, lessee, or other opera tor of a diesel-powered train for use as a fuel in such train, or

`(B) used by any person as a fuel in a diesel-powered train unless there was a taxable sale of such liquid under subparagraph (A).

No tax shall be imposed by this paragraph on the sale or use of a ny liquid if there was a taxable sale of such liquid under section 4091.'

(D) Paragraph (4) of section 9503(b) is amended to read as follows:

`(4) CERTAIN ADDITIONAL TAXES NOT TRANSFERRED TO HIGHWAY TRUST FUND- For purposes of paragraphs (1) and (2)--

`(A) there shall be taken into account the taxes imposed by sections 4041, 4081, and 4091 only to the extent attributable to section 4041(c ) and the Highway Trust Fund financing rates and 20 percent of the deficit reduc tion rate under such sections.

`(B) there shall not be taken into account the taxes impose d by section 4041(a)(3) or 4091 on any diesel fuel used in a diesel-powered trai n.'

(5) INCREASES IN TAXES NOT TO APPLY TO INTERCITY BUSES- Subpara graph (A) of section 6427(b)(2) is amended by striking `shall not exceed 12 cent s' and inserting `shall be 3.1 cents per gallon less than the aggregate rate at which tax was imposed on such fuel by section 4041 or 4091, as the case may be'.

(6) CONFORMING AMENDMENTS-

(A) Paragraph (1) of section 4091(c) is amended--

(i) by striking `9 cents' and inserting `13.75 cents' a nd by striking `10 cents' and inserting `15.28 cents', and

(ii) by striking `shall be 1/9 cent per gallon' and ins erting `and the diesel fuel deficit reduction rate shall be 10/9th of the otherw ise applicable such rates under subsection (b)'.

(B) Paragraph (2) of section 4091(c) is amended by striking `9 cents' and inserting `13.75 cents'.

(C) Paragraph (1) of section 4041(a) is amended by striking `of 15 cents a gallon' and by inserting before the last sentence the following new sentence:

`The rate of the tax imposed by this paragraph shall be the sum o f the Highway Trust Fund financing rate and the diesel fuel deficit reduction ra te in effect under section 4091 at the time of such sale or use.'

(D) Subparagraph (A) of section 4041(b)(2) is amended to re ad as follows:

`(A) IN GENERAL- In the case of--

`(i) qualified methanol fuel, the Highway Trust Fund fi nancing rate applicable under subsection (a)(2) shall be 6 cents per gallon less than the otherwise applicable rate under such subsection,

`(ii) qualified ethanol fuel, the deficit reduction fin ancing rate applicable under subsection (a)(2) shall be the otherwise applicable rate under such subsection plus 0.5 cent per gallon, and

`(iii) qualified methanol or ethanol fuel, subsection ( d)(1) shall be applied by substituting `0.05 cent' for `0.1 cent' with respect t o sales and uses to which clause (i) or (ii) applies.'.

(E) Paragraph (1) of section 4041(k) is amended by striking subparagraphs (A) and (B) and inserting the following new subparagraphs:

`(A) with respect to liquids containing any alcohol other t han ethanol, the Highway Trust Fund financing rates under paragraphs (1) and (2) of subsection (a) shall be 6 cents per gallon less than the otherwise applicabl e rates under such paragraphs,

`(B) with respect to liquids containing ethanol, the defici t reduction financing rates under paragraphs (1) and (2) of subsection (a) shall be the otherwise applicable rates under such paragraphs plus 0.5 cent per gallo n, and'.

(F) Section 4041(m)(1) is amended by striking subparagraph (A), by redesignating subparagraph (B) as subparagraph (C), and by inserting bef ore subparagraph (C) the following new subparagraphs:

`(A) with respect to partially exempt methanol, the Highway Trust Fund financing rate applicable under subsection (a)(2) shall be 4.5 cents per gallon less than the otherwise applicable rate under such subsection,< /ul>

`(B) with respect to partially exempt ethanol, the deficit reduction financing rate applicable under subsection (a)(2) shall be the otherwi se applicable rate under such subsection plus 0.5 cent per gallon, and'.

(G) Subsection (d) of section 9502 is amended by adding at the end thereof the following new paragraph:

`(4) TRANSFERS FOR REFUNDS AND CREDITS NOT TO EXCEED TRUST FUND REVENUES ATTRIBUTABLE TO FUEL USED- The amounts payable from the Airport and Ai rway Trust Fund under paragraph (2) or (3) shall not exceed the amounts required to be appropriated to such Trust Fund with respect to fuel so used.'
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(H) Subparagraph (D) of section 9503(c)(4) is amended by st riking `(to the extent attributable to the Highway Trust Fund financing rate)' a nd by inserting before the period `, but only to the extent such taxes are attri butable to the Highway Trust Fund financing rates under such sections'.

(7) RATES OF TAX FOR DIESEL FUEL AFTER NOVEMBER 30, 1990, AND B EFORE JANUARY 1, 1992- Section 4091 is amended by adding at the end thereof the following new subsection:

`(e) RATES OF TAX FOR DIESEL FUEL AFTER NOVEMBER 30, 1990, AND BEFO RE JANUARY 1, 1992-

`(1) HIGHWAY TRUST FUND FINANCING RATES-

`(A) In the case of diesel fuel on which tax is imposed aft er November 30, 1990, and before July 1, 1991--

`(i) subsection (b)(2) shall be applied by substituting `17 cents' for `19.75 cents', and

`(ii) subsection (c) shall be applied by substituting--

`(I) `11 cents' for `13.75 cents' each place it app ears, and

`(II) `12.22 cents' for `15.28 cents'.

`(B) In the case of diesel fuel on which tax is imposed aft er June 30, 1991, and before January 1, 1992--

`(i) subsection (b)(2) shall be applied by substituting `19.5 cents' for `19.75 cents', and

`(ii) subsection (c) shall be applied by substituting--

`(I) `13.5 cents' for `13.75 cents' each place it a ppears, and

`(II) `15 cents' for `15.28 cents'.
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`(2) DIESEL FUEL DEFICIT REDUCTION RATE-

`(A) In the case of diesel fuel on which tax is imposed aft er November 30, 1990, and before July 1, 1991, subsection (b)(4) shall be applie d by substituting `2 cents a gallon (2.5 cents a gallon' for `4.75 cents a gallo n (5.25 cents a gallon'.

`(B) In the case of diesel fuel on which tax is imposed aft er June 30, 1991, and before January 1, 1992, subsection (b)(4) shall be applied by substituting `4.5 cents a gallon (5 cents a gallon' for `4.75 cents a gallon (5.25 cents a gallon'.'`4.5 cents' for `4.75 cents'.'

(8) EFFECTIVE DATE- The amendments made by this subsection shal l take effect on December 1, 1990.

(c) EXTENSION OF TAXES- The following provisions are each amended b y striking `1993' each place it appears and inserting `1995':

(1) Section 4041(a)(4) (relating to tax on diesel and special f uels), as redesignated by subsection (b)(4)(C).

(2) Section 4051(c) (relating to tax on heavy trucks and traile rs sold at retail).

(3) Section 4071(d) (relating to tax on tires and tread rubber) .

(4) Section 4081(d)(1) (relating to gasoline tax).

(5) Section 4091(b)(6)(A) (relating to diesel fuel tax), as red esignated by section 13211(b).

(6) Sections 4481(e), 4482(c)(4), and 4482(d) (relating to high way use tax).

(d) EXTENSION OF EXEMPTIONS-

(1) Paragraph (3) of section 4041(f) (relating to exemptions fo r farm use) is amended by striking `1993' and inserting `1995'.

(2) The last sentence of section 4041(g) (relating to other exe mptions) is amended by striking `1993' and inserting `1995'.

(3) Subsection (a) of section 4221 (relating to certain tax-fre e sales) is amended by striking `1993' and inserting `1995'.

(4) Subsection (g) of section 4483 (relating to termination of exemptions for highway use tax) is amended by striking `1993' and inserting `199 5'.

(5) Section 6420 (relating to gasoline used on farms) is amende d by striking subsection (h) and by redesignating subsection (i) as subsection ( h).

(6)(A) Section 6421 (relating to gasoline used for certain nonh ighway purposes, etc.) is amended by striking subsection (i) and by redesignatin g subsections (j) and (k) as subsections (i) and (j), respectively.

(B) Subsections (a) and (b) of section 6421 are each amended by striking `subsection (j)' and by inserting `subsection (i)'.

(7) Paragraph (5) of section 6427(g) (relating to advance repay ment of increased diesel fuel tax) is amended by striking `1993' and inserting ` 1995'.

(e) EXTENSION OF REDUCED RATES OF TAX ON FUELS CONTAINING ALCOHOL- The following provisions are each amended by striking `1993' each place it appea rs and inserting `2000, or if earlier for any period before January 1, 2000, dur ing which the Highway Trust Fund financing rate under section 4081(a)(2) is not in effect':

(1) Section 4041(b)(2)(C) (relating to qualified methanol and e thanol fuel).

(2) Section 4041(k)(3) (relating to fuels containing alcohol).

(3) Section 4081(c)(4) (relating to gasoline mixed with alcohol ).

(4) Subsections (c) and (d) of section 4091 (relating to diesel fuel and aviation fuel mixed with alcohol and aviation fuel used to produce cer tain alcohol fuels).

(5) Section 6427(f)(3) (relating to fuels used to produce certa in alcohol fuels).

(f) OTHER PROVISIONS-

(1) FLOOR STOCKS REFUNDS- Section 6412(a)(1) (relating to floor stocks refunds) is amended--

(A) by striking `1993' each place it appears and inserting `1995', and

(B) by striking `1994' each place it appears and inserting `1996'.

(2) INSTALLMENT PAYMENTS OF HIGHWAY USE TAX- Section 6156(e)(2) (relating to installment payments of tax on use of highway motor vehicles) is a mended by striking `1993' and inserting `1995'.

(g) EXTENSION OF DEPOSITS INTO TRUST FUND-

(1) IN GENERAL- Subsection (b), and paragraphs (2), (3), and (4 ) of subsection (c), of section 9503 (relating to the Highway Trust Fund) are ea ch amended--

(A) by striking `1993' each place it appears and inserting `1995', and

(B) by striking `1994' each place it appears and inserting `1996'.

(2) CONFORMING AMENDMENTS TO LAND AND WATER CONSERVATION FUND- Section 201(b) of the Land and Water Conservation Fund Act of 1965 (16 U.S.C. 46 0l-11) is amended--

(A) by striking `1993' and inserting `1995', and
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(B) by striking `1994' each place it appears and inserting `1996'.

(h) INCREASE IN TRANSFERS TO MASS TRANSIT ACCOUNT-

(1) IN GENERAL- Paragraph (2) of section 9503(e) is amended by striking `1 cent' and inserting `1.95 cents'.

(2) EFFECTIVE DATE- The amendment made by paragraph (1) shall a pply to amounts attributable to taxes imposed on or after December 1, 1990.

(3) TAXES IMPOSED BEFORE JANUARY 1, 1991-

(A) In the case of taxes imposed after November 30, 1990, a nd before July 1, 1991, paragraph (2) of section 9503(e) of the Internal Revenue Code of 1986 shall be applied by substituting `1.4 cents' for `1.95 cents'.

(B) In the case of taxes imposed after June 30, 1991, and b efore January 1, 1992, paragraph (2) of section 9503(e) of the Internal Revenue Code of 1986 shall be applied by substituting `1.9 cents' for `1.95 cents'.

(i) ESTABLISHMENT OF WETLANDS FUND ACCOUNT-

(1) IN GENERAL- Section 9504 (relating to aquatic resources tru st fund) is amended--

(A) by striking `and' at the end of subsection (a)(2)(A),

(B) by striking the period at the end of subsection (a)(2)( B) and inserting `, and',

(C) by inserting after subsection (a)(2)(B) the following n ew subparagraph:

`(C) a Wetlands Fund Account.',

(D) by inserting `Wetlands Fund Account,' before `Boat Safe ty Account' in subsection (d), and

(E) by redesignating subsection (d) as subsection (e) and i nserting after subsection (c) the following new subsection:

`(d) EXPENDITURES FROM WETLANDS FUND ACCOUNT- Amounts in the Wetlan ds Fund Account shall be available, as provided by appropriation Acts, for makin g expenditures to carry out the purposes of any law which is substantially ident ical to sections 4 through 8 of S. 1731 of the 101st Congress as passed the Sena te on August 2, 1990.'

(2) TRANSFER OF NEW MOTORBOAT FUEL TAXES TO ACCOUNT- Section 95 03(c)(4) (relating to transfers from the trust fund for motorboat fuel taxes), a s amended, is further amended--

(A) by inserting `, at the rates in effect before December 1, 1990' after `1995' in subparagraph (A)(i), and

(B) by redesignating subparagraphs (D) and (E) as subparagr aphs (E) and (F), respectively, and inserting after subparagraph (C) the followi ng new paragraph:

`(D) TRANSFER TO WETLANDS FUND ACCOUNT- Any amount received in the Highway Trust Fund--

`(i) which is attributable to motorboat fuel taxes, and

`(ii) which is not transferred from the Highway Trust Fund under subparagraphs (A), (B), or (C),

shall be transferred by the Secretary from the Highway Trust Fund into the Wetlands Fund Account in the Aquatics Resources Trust Fund.'

(3) EFFECTIVE DATE- The amendments made by this subsection shal l take effect on December 1, 1990.

(j) FLOOR STOCKS TAXES-

(1) IMPOSITION OF TAX- In the case of gasoline and diesel fuel on which tax was imposed under section 4081 or 4091 of such Code before any tax- increase date (other than gasoline on which tax is imposed under section 4041(c) (2) of such Code) and which is held on such date by any person, there is hereby imposed a floor stocks tax on such gasoline and diesel fuel.

(2) RATE OF TAX- The rate of the tax imposed by paragraph (1) s hall be--

(A) 4 cents per gallon in the case of the tax imposed on De cember 1, 1990,

(B) 5 cents per gallon in the case of the tax imposed on Ju ly 1, 1991, and

(C) 0.5 cent per gallon in the case of the tax imposed on J anuary 1, 1992.

(3) LIABILITY FOR TAX AND METHOD OF PAYMENT-

(A) LIABILITY FOR TAX- A person holding gasoline or diesel fuel on any tax-increase date to which the tax imposed by paragraph (1) applies shall be liable for such tax.

(B) METHOD OF PAYMENT- The tax imposed by paragraph (1) sha ll be paid in such manner as the Secretary shall prescribe.

(C) TIME FOR PAYMENT- The tax imposed by paragraph (1) shal l be paid on or before--

(i) May 31, 1991, in the case of the tax imposed on Dec ember 1, 1990,

(ii) September 15, 1991, in the case of the tax imposed on July 1, 1991, and

(iii) June 30, 1992, in the case of the tax imposed on January 1, 1992.

(4) DEFINITIONS- For purposes of this subsection--

(A) TAX-INCREASE DATE- The term `tax-increase date' means D ecember 1, 1990, July 1, 1991, and January 1, 1992.

(B) HELD BY A PERSON- Gasoline and diesel fuel shall be con sidered as `held by a person' if title thereto has passed to such person (whethe r or not delivery to the person has been made).

(C) GASOLINE- The term `gasoline' has the meaning given suc h term by section 4082 of such Code.

(D) DIESEL FUEL- The term `diesel fuel' has the meaning giv en such term by section 4092 of such Code.

(E) SECRETARY- The term `Secretary' means the Secretary of the Treasury or his delegate.

(5) EXCEPTION FOR EXEMPT USES- The tax imposed by paragraph (1) shall not apply to gasoline or diesel fuel held by any person exclusively for a ny use to the extent a credit or refund of the tax imposed by section 4081 or 40 91 of such Code, as the case may be, is allowable for such use.

(6) EXCEPTION FOR FUEL HELD IN VEHICLE TANK- No tax shall be im posed by paragraph (1) on gasoline or diesel fuel held in the tank of a motor ve hicle or motorboat.

(7) EXCEPTION FOR CERTAIN AMOUNTS OF FUEL-

(A) IN GENERAL- No tax shall be imposed by paragraph (1)--

(i) on gasoline held on any tax-increase date by any pe rson if the aggregate amount of gasoline held by such person on such date does n ot exceed 4,000 gallons, and

(ii) on diesel fuel held on any tax-increase date by an y person if the aggregate amount of diesel fuel held by such person on such date does not exceed 2,000 gallons.

The preceding sentence shall apply only if such person submit s to the Secretary (at the time and in the manner required by the Secretary) suc h information as the Secretary shall require for purposes of this paragraph.

(B) EXEMPT FUEL- For purposes of subparagraph (A), there sh all not be taken into account fuel held by any person which is exempt from the t ax imposed by paragraph (1) by reason of paragraph (5).

(C) CONTROLLED GROUPS- For purposes of this paragraph, rule s similar to the rules of paragraph (5) of section 13201(e) of this Act shall ap ply.

(7) OTHER LAWS APPLICABLE- All provisions of law, including pen alties, applicable with respect to the taxes imposed by section 4081 of such Cod e in the case of gasoline and section 4091 in the case of diesel fuel shall, ins ofar as applicable and not inconsistent with the provisions of this subsection, apply with respect to the floor stock taxes imposed by paragraph (1) to the same extent as if such taxes were imposed by such section 4081 or 4091.

(8) TRANSFER OF PORTION OF FLOOR STOCKS REVENUE TO HIGHWAY TRUS T FUND- For purposes of determining the amount transferred to the Highway Trust Fund, the tax imposed by paragraph (1) shall be treated as imposed at a Highway Trust Fund financing rate to the extent of--

(A) 2 cents per gallon in the case of the tax imposed on De cember 1, 1990,

(B) 2.5 cents per gallon in the case of the tax imposed on July 1, 1991, and

(C) 0.25 cent per gallon in the case of the tax imposed on January 1, 1992.

(k) AMENDMENTS RELATING TO IMPROVED ENFORCEMENT OF GASOLINE TAX-

(1) REPORTING REQUIREMENTS- Section 4082 (relating to definitio ns) is amended by adding at the end thereof the following new subsection:

`(c) REPORTING REQUIRED OF TERMINAL OPERATORS-

`(1) IN GENERAL- Each person--

`(A) who is registered (or is required to be registered) un der section 4101 as a terminal operator, and

`(B) from whose terminal gasoline is removed,

shall make a return (at such time and in such form as the Secreta ry may by regulations prescribe).

`(1) SPECIFIC REPORT REQUIREMENTS- The report described in para graph (1) shall specify--

`(A) the name, address, and registration number under secti on 4101 of the owner (or the owner of record in such cases as the Secretary deem s appropriate) of the gasoline,

`(B) the amount of gasoline removed, and

`(C) such other information as the Secretary may require.'

(2) REGISTRATION AND BOND-

(A) IN GENERAL- Section 4101 is amended to read as follows:

`SEC. 4101. REGISTRATION AND BOND.

`(a) REGISTRATION- Each person--

`(1) before incurring any liability for tax under section 4091, or

`(2) required by the Secretary as the Secretary determines to b e necessary to carry out this part,

shall register with the Secretary at such time, in such manner and fo rm, and subject to such terms and conditions, as the Secretary may by regulation s prescribe. A registration under this subsection may be used only in accordance with regulations prescribed under this subsection. Rules similar to the rules o f section 4222(c) shall apply for purposes of this subsection.

`(b) BONDS AND LIENS- Under regulations prescribed by the Secretary , the Secretary may require, as a condition of permitting any person to be regis tered under subsection (a), that such person--

`(1) give a bond in such sum as the Secretary determines approp riate, and

`(2) agree to the imposition of a lien on such property (or rig hts to property) of such person as the Secretary determines appropriate.

If a lien is imposed pursuant to paragraph (2), the Secretary shall r elease such lien in connection with a transfer of the property if there is furni shed to the Secretary (and accepted by the Secretary) a bond in such sum as the Secretary determines appropriate. The Secretary shall respond to any request to release a lien imposed pursuant to paragraph (2) in connection with a transfer o f the property not later than 90 days after the date the request for such a rele ase is made.'

(B) DISCLOSURE PERMITTED OF REGISTRATION INFORMATION- Subse ction (k) of section 6103 (relating to disclosure of certain returns and return information for tax administration purposes) is amended by adding at the end the reof the following new paragraph:

`(7) DISCLOSURE OF NAMES AND REGISTRATION NUMBERS FOR ADMINISTR ATION OF EXCISE TAXES- The name, address, and registration number of any person registered with the Secretary under subtitle D may be disclosed to the extent ne cessary to permit the effective administration of such subtitle. In the case of the tax imposed by section 4081, the terminals owned by such person may also be disclosed.'

(3) CONFORMING AMENDMENT- The table of sections for subpart A o f part III of subchapter A of chapter 32 is amended by inserting `and special ru les' in the item relating to section 4082.

(4) EFFECTIVE DATE- The amendments made by this subsection shal l take effect on January 1, 1991.

SEC. 7405A. INCREASE AND EXTENSION OF AVIATION-RELATED TAXES AND TRUS T FUND; REPEAL OF REDUCTION IN RATES.

(a) INCREASE IN RATES ON TRANSPORTATION-

(1) TRANSPORTATION OF PERSONS- Subsections (a) and (b) of secti on 4261 are each amended by striking `8 percent' and inserting `10 percent'.

(2) TRANSPORTATION OF PROPERTY- Subsection (a) of section 4271 is amended by striking `5 percent' and inserting `6.25 percent'.

(3) EFFECTIVE DATE- The amendments made by this subsection shal l apply to transportation beginning after December 31, 1990, but shall not apply to amounts paid on or before such date.

(b) INCREASE IN RATES ON FUEL-

(1) NONCOMMERCIAL AVIATION JET FUELS- Paragraph (3) of section 4091(b) is amended by striking `14 cents' and inserting `17.5 cents'.
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(2) CONFORMING AMENDMENTS-

(A) Paragraph (1) of section 4041(c) is amended by striking `14 cents' and inserting `17.5 cents'.

(B)(i) Subparagraph (B) of section 4041(k)(1), as redesigna ted by section 13211 of this Act, is amended to read as follows:
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`(B) subsection (c) shall be applied by substituting `3.5 c ents' for `17.5 cents' and `3 cents' for `15 cents'.'

(ii) Subparagraph (B) of section 4041(m)(1) is amended to r ead as follows:

`(B) subsection (c) shall be applied by substituting `3.5 c ents' for `17.5 cents' and `3 cents' for `15 cents'.'

(C)(i) Paragraphs (1) and (2) of section 4091(d) are amende d to read as follows:

`(1) IN GENERAL- The Airport and Airway Trust Fund financing ra te shall be--

`(A) 3.5 cents per gallon in the case of the sale of any mi xture of aviation fuel if--

`(i) at least 10 percent of such mixture consists of al cohol (as defined in section 4081(c)(3)), and

`(ii) the aviation fuel in such mixture was not taxed u nder subparagraph (B), and

`(B) 3.89 cents per gallon in the case of the sale of aviat ion fuel for use (at the time of such sale) in producing a mixture described in subparagraph (A).

In the case of a sale described in subparagraph (B), the Leaking Underground Storage Tank Trust Fund financing rate shall be 1/9 cent per gallo n.

`(2) LATER SEPARATION- If any person separates the aviation fue l from a mixture of the aviation fuel and alcohol on which tax was imposed under subsection (a) at the Airport and Airway Trust Fund financing rate equivalent t o 3.5 cents per gallon by reason of this subsection (or with respect to which a credit or payment was allowed or made by reason of section 6427(f)(1)), such per son shall be treated as the producer of such aviation fuel. The amount of tax im posed on any sale of such aviation fuel by such person shall be reduced by the a mount of tax imposed (and not credited or refunded) on any prior sale of such fu el.'

(ii) The heading for subsection (d) of section 4091 is amen ded by striking `EXEMPTION FROM' and inserting `REDUCED RATE OF'.

(3) Subsection (f) of section 6427 is amended to read as follow s:

`(f) GASOLINE, DIESEL FUEL, AND AVIATION FUEL USED TO PRODUCE CERTA IN ALCOHOL FUELS-

`(1) IN GENERAL- Except as provided in subsection (k), if any g asoline, diesel fuel, or aviation fuel on which tax was imposed by section 4081 or 4091 at the regular tax rate is used by any person in producing a mixture des cribed in section 4081(c), 4091(c)(1)(A), or 4091(d)(1)(A) (as the case may be) which is sold or used in such person's trade or business the Secretary shall pay (without interest) to such person an amount equal to the excess of the regular tax rate over the incentive tax rate with respect to such fuel.

`(2) DEFINITIONS- For purposes of paragraph (1)--

`(A) REGULAR TAX RATE- The term `regular tax rate' means--

`(i) in the case of gasoline, the aggregate rate of tax imposed by section 4081 determined without regard to subsection (c) thereof,

`(ii) in the case of diesel fuel, the aggregate rate of tax imposed by section 4091 on such fuel determined without regard to subsectio n (c) thereof, and

`(iii) in the case of aviation fuel, the aggregate rate of tax imposed by section 4091 on such fuel determined without regard to subsec tion (d) thereof.

`(B) INCENTIVE TAX RATE- The term `incentive tax rate' mean s--

`(i) in the case of gasoline, the aggregate rate of tax imposed by section 4081 with respect to fuel described in subsection (c)(1) the reof,

`(ii) in the case of diesel fuel, the aggregate rate of tax imposed by section 4091 with respect to fuel described in subsection (c)(1) (B) thereof, and

`(iii) in the case of aviation fuel, the aggregate rate of tax imposed by section 4091 with respect to fuel described in subsection (d) (1)(B) thereof.

`(3) COORDINATION WITH OTHER REPAYMENT PROVISIONS- No amount sh all be payable under paragraph (1) with respect to any gasoline, diesel fuel, or aviation fuel with respect to which an amount is payable under subsection (d), (e), or (l) of this section or under section 6420 or 6421.

`(4) TERMINATION- This subsection shall not apply with respect to any mixture sold or used after September 30, 2000, or if earlier for any peri od before January 1, 2000, during which the Highway Trust Fund financing rate un der section 4081(a)(2) is not in effect.'

(4) EFFECTIVE DATES- The amendments made by this subsection sha ll take effect on January 1, 1991.

(5) FLOOR STOCKS TAXES-

(A) IMPOSITION OF TAX- In the case of gasoline or aviation fuel on which tax was imposed under section 4041(c)(2) or 4091 of the Internal R evenue Code of 1986 before January 1, 1991, and which is held on such date by an y person, there is hereby imposed a floor stocks tax on such gasoline or fuel.

(B) RATE OF TAX- The rate of the tax imposed by subparagrap h (A) shall be--

(i) 3 cents per gallon in the case of gasoline, and

(ii) 3.5 cents per gallon in the case of aviation fuel.

(C) LIABILITY FOR TAX AND METHOD OF PAYMENT-

(i) LIABILITY FOR TAX- A person holding gasoline or avi ation fuel on January 1, 1991, to which the tax imposed by this paragraph applie s shall be liable for such tax.

(ii) METHOD OF PAYMENT- The tax imposed by this paragra ph shall be paid in such manner as the Secretary shall prescribe.

(iii) TIME FOR PAYMENT- The tax imposed by this paragra ph shall be paid on or before June 30, 1991.

(D) DEFINITIONS- For purposes of this paragraph--

(i) HELD BY A PERSON- Gasoline or aviation fuel shall b e considered as `held by a person' if title thereto has passed to such person (w hether or not delivery to the person has been made).

(ii) GASOLINE- The term `gasoline' has the meaning give n such term by section 4082 of such Code.

(iii) AVIATION FUEL- The term `aviation fuel' has the m eaning given such term by section 4092(a) of such Code.

(iv) SECRETARY- The term `Secretary' means the Secretar y of the Treasury or his delegate.

(E) EXCEPTION FOR EXEMPT USES- The tax imposed by this para graph shall not apply to fuel held by any person exclusively for any use which i s a nontaxable use (as defined in section 6427(l) of such Code).
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(F) OTHER LAWS APPLICABLE- All provisions of law, including penalties, applicable with respect to the taxes imposed by section 4091 of such Code shall, insofar as applicable and not inconsistent with the provisions of t his paragraph, apply with respect to the floor stock taxes imposed by this parag raph to the same extent as if such taxes were imposed by such section 4091.

(c) EXTENSION OF TAXES AND TRUST FUND-

(1) TRANSPORTATION TAXES- Sections 4261(g) and 4271(d) are each amended by striking `January 1, 1991' and inserting `January 2, 1996'.

(2) FUEL TAXES-

(A) Subparagraph (B) of section 4091(b)(6) (as redesignated by section 13211(b)) is amended by striking `January 2, 1991' and inserting `Ja nuary 2, 1996'.

(B) Paragraph (5) of section 4041(c) is amended by striking `December 31, 1990' and inserting `December 31, 1995'.

(3) DEPOSITS INTO TRUST FUND- Subsection (b) of section 9502 (r elating to transfer to Airport and Airway Trust Fund of amounts equivalent to ce rtain taxes) is amended by striking `January 1, 1991' each place it appears and inserting `January 1, 1996'.

(4) CONFORMING AMENDMENT- Section 9502(b)(2) is amended by inse rting `and the deficit reduction financing rate' after `rate'.

(d) REPEAL OF REDUCTION IN RATES-

(1) Section 4283 (relating to reduction in aviation related tax es in certain cases) is hereby repealed.

(2) The table of sections for part III of subchapter C of chapt er 33 is amended by striking the item relating to section 4283.

(3) Subsection (c) of section 4041 is amended by striking parag raph (6).

SEC. 7405B. SENSE OF THE SENATE.

It is the sense of the Senate that the conferees be instructed to a djust the taxes imposed by sections 4041(a)(3) or 4091 on any diesel fuel used o n a diesel-powered train so that such taxes will not exceed the increases to tax es imposed under sections 4041, 4081 and 4091 (other than on trains) which will not be dedicated to the Highway Trust Fund.

SEC. 7406. INCREASE IN HARBOR MAINTENANCE TAX.

(a) IN GENERAL- Subsection (b) of section 4461 is amended by striki ng `0.04 percent' and inserting `0.125 percent'.

(b) HARBOR MAINTENANCE COSTS- Section 210(a) of the Water Resources Development Act of 1986 (33 U.S.C. 2238(a)) is amended by striking paragraph (2 ) and inserting in lieu thereof the following new paragraph:

`(2) up to 100 percent of the eligible operations and maintenan ce costs assigned to commercial navigation of all harbors within the United Stat es, including all necessary dredged material management and disposal costs, incl uding studies, monitoring, structures required for disposal, and any alternative method of disposal.'

(b) EFFECTIVE DATE- The amendments made by this section shall take effect on January 1, 1991.

SEC. 7407. EXTENSION OF LEAKING UNDERGROUND STORAGE TANK TRUST FUND T AXES.

(a) IN GENERAL- Paragraph (2) of section 4081(d) is amended to read as follows:

`(2) LEAKING UNDERGROUND STORAGE TANK TRUST FUND FINANCING RATE - The Leaking Underground Storage Tank Trust Fund financing rate under subsectio n (a)(2) shall not apply after December 31, 1995.'

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall take effect on December 1, 1990.

SEC. 7408. FLOOR STOCKS TAX TREATMENT OF ARTICLES IN FOREIGN TRADE ZO NES.

Notwithstanding the Act of June 18, 1934 (48 Stat. 998, 19 U.S.C. 8 1a) or any other provision of law, any article which is located in a foreign tra de zone on the effective date of any increase in tax under the amendments made b y this part, part I, or part IV shall be subject to floor stocks taxes imposed b y such parts if--

(1) internal revenue taxes have been determined, or customs dut ies liquidated, with respect to such article before such date pursuant to a requ est made under the 1st proviso of section 3(a) of such Act, or

(2) such article is held on such date under the supervision of a customs officer pursuant to the 2d proviso of such section 3(a).

Subpart C--Taxes on Luxury Items

SEC. 7409. TAXES ON LUXURY ITEMS.

(a) IN GENERAL- Chapter 31 (relating to retail excise taxes) is ame nded by redesignating subchapters A and B as subchapters B and C, respectively, and by inserting before subchapter B (as so redesignated) the following new sub chapter:

`Subchapter A--Certain Luxury Items

`Part I. Imposition of taxes.
`Part II. Rules of general applicability.
`PART I. IMPOSITION OF TAXES

`Subpart A. Passenger vehicles, boats, and aircraft.
`Subpart B. Jewelry and furs.
`Subpart A--Passenger Vehicles, Boats, and Aircraft

`Sec. 4001. Passenger vehicles.
`Sec. 4002. Boats.
`Sec. 4003. Aircraft.
`Sec. 4004. Rules applicable to subpart A.
`SEC. 4001. PASSENGER VEHICLES.

`(a) IMPOSITION OF TAX- There is hereby imposed on the 1st retail s ale of any passenger vehicle a tax equal to 10 percent of the price for which so sold to the extent such price exceeds $30,000.

`(b) PASSENGER VEHICLE-

`(1) IN GENERAL- For purposes of subsection (a), the term `pass enger vehicle' means any 4-wheeled vehicle--

`(A) which is manufactured primarily for use on public stre ets, roads, and highways, and

`(B) which is rated at 6,000 pounds unloaded gross vehicle weight or less.

`(2) SPECIAL RULES-

`(A) TRUCKS AND VANS- In the case of a truck or van, paragr aph (1)(B) shall be applied by substituting `gross vehicle weight' for `unloaded gross vehicle weight'.

`(B) LIMOUSINES- In the case of a limousine, paragraph (1) shall be applied without regard to subparagraph (B) thereof.

`(c) EXCEPTIONS FOR TAXICABS, ETC- The tax imposed by this section shall not apply to the sale of any passenger vehicle for use by the purchaser ex clusively in the active conduct of a trade or business of transporting persons o r property for compensation or hire.

`SEC. 4002. BOATS.

`(a) IMPOSITION OF TAX- There is hereby imposed on the 1st retail s ale of any boat a tax equal to 10 percent of the price for which so sold to the extent such price exceeds $100,000.

`(b) EXCEPTIONS- The tax imposed by this section shall not apply to the sale of any boat for use by the purchaser exclusively in the active conduct of--

`(1) a trade or business of commercial fishing or transporting persons or property for compensation or hire, or

`(2) any other trade or business unless the boat is to be used predominantly in any activity which is of a type generally considered to constit ute entertainment, amusement, or recreation.

`SEC. 4003. AIRCRAFT.

`(a) IMPOSITION OF TAX- There is hereby imposed on the 1st retail s ale of any aircraft a tax equal to 10 percent of the price for which so sold to the extent such price exceeds $250,000.

`(b) AIRCRAFT- For purposes of this section, the term `aircraft' me ans any aircraft--

`(1) which is propelled by a motor, and

`(2) which is capable of carrying 1 or more individuals.

`(c) EXCEPTIONS- The tax imposed by this section shall not apply to the sale of any aircraft for use by the purchaser exclusively--

`(1) in the aerial application of fertilizers or other substanc es,

`(2) in the case of a helicopter, in a use described in paragra ph (1) or (2) of section 4261(e),

`(3) in a trade or business of providing flight training, or

`(4) in a trade or business of transporting persons or property for compensation or hire.

`(d) REFUND AND CREDIT OF TAX RESULTING FROM BUSINESS EXPERIENCE- A ny tax paid by a purchaser of any aircraft under this section may be refunded or credited to the purchaser, without interest, if after the 12-month period begin ning on the date of purchase, such purchaser demonstrates to the satisfaction of the Secretary that 80 percent of the use of such aircraft during such period wa s in the purchaser's trade or business. Such refund or claim shall be filed with the purchaser's return with respect to income taxes under subtitle A, the due d ate of which first occurs after such period.

`SEC. 4004. RULES APPLICABLE TO SUBPART A.

`(a) EXEMPTION FOR LAW ENFORCEMENT USES, ETC- No tax shall be impos ed under this subpart on the sale of any article--

`(1) to the Federal Government, or a State or local government, for use exclusively in police, firefighting, search and rescue, or other law en forcement or public safety activities, or

`(2) to any person for use exclusively in providing emergency m edical services.

`(b) SEPARATE PURCHASE OF ARTICLE AND PARTS AND ACCESSORIES THEREFO R- Under regulations prescribed by the Secretary--

`(1) IN GENERAL- Except as provided in paragraph (2), if--

`(A) the owner, lessee, or operator of any article taxable under this subpart (determined without regard to price) installs (or causes to b e installed) any part or accessory on such article, and

`(B) such installation is not later than the date 6 months after the date the article was 1st placed in service,

then there is hereby imposed on such installation a tax equal to 10 percent of the price of such part or accessory and its installation.

`(2) LIMITATION- The tax imposed by paragraph (1) on the instal lation of any part or accessory shall not exceed 10 percent of the excess (if an y) of--

`(A) the sum of--

`(i) the price of such part or accessory and its instal lation,

`(ii) the aggregate price of the parts and accessories (and their installation) installed before such part or accessory, plus

`(iii) the price for which the passenger vehicle, boat, or aircraft was sold, over

`(B) $30,000 ($100,000 in the case of a boat or $250,000 in the case of an aircraft).

`(3) EXCEPTIONS- Paragraph (1) shall not apply if--

`(A) the part or accessory installed is a replacement part or accessory, or

`(B) the aggregate price of the parts and accessories (and their installation) described in paragraph (1) with respect to the taxable artic le does not exceed $200 (or such other amount or amounts as the Secretary may by regulation prescribe).

`(4) INSTALLERS SECONDARILY LIABLE FOR TAX- The owners of the t rade or business installing the parts or accessories shall be secondarily liable for the tax imposed by this subsection.

`(c) IMPOSITION OF TAX ON SALES, ETC., WITHIN 2 YEARS OF ARTICLES P URCHASED TAX-FREE-

`(1) IN GENERAL- If--

`(A) no tax was imposed under this subchapter on the 1st re tail sale of any article by reason of its exempt use, and

`(B) within 2 years after the date of such 1st retail sale, such article is resold by the purchaser or such purchaser makes a substantial n on-exempt use of such article,

then such sale or use of such article by such purchaser shall be treated as the 1st retail sale of such article for a price equal to its fair mar ket value at the time of such sale or use.

`(2) EXEMPT USE- For purposes of this subsection, the term `exe mpt use' means any use of an article if the 1st retail sale of such article is n ot taxable under this subchapter by reason of such use.

`Subpart B--Jewelry and Furs

`Sec. 4006. Jewelry.
`Sec. 4007. Furs.
`SEC. 4006. JEWELRY.

`(a) IMPOSITION OF TAX- There is hereby imposed on the 1st retail s ale of any jewelry a tax equal to 10 percent of the price for which so sold to t he extent such price exceeds $5,000.

`(b) JEWELRY- For purposes of subsection (a), the term `jewelry' me ans all articles commonly or commercially known as jewelry, whether real or imit ation, including watches.

`(c) MANUFACTURE FROM CUSTOMER'S MATERIAL- If--

`(1) a person who in the course of a trade or business produces jewelry from material furnished directly or indirectly by a customer, and< /ul>

`(2) the jewelry so manufactured is for the use of, and not for resale by, such customer,

the delivery of such jewelry to such customer shall be treated as the 1st retail sale of such jewelry for a price equal to its fair market value at t he time of such delivery.

`SEC. 4007. FURS.

`(a) IMPOSITION OF TAX- There is hereby imposed on the 1st retail s ale of the following articles a tax equal to 10 percent of the price for which s o sold to the extent such price exceeds $5,000:

`(1) Articles made of fur on the hide or pelt.

`(2) Articles of which such fur is a major component.

`(b) MANUFACTURE FROM CUSTOMER'S MATERIAL- If--

`(1) a person who in the course of a trade or business produces an article of the kind described in subsection (a) from fur on the hide or pelt furnished, directly or indirectly, by a customer, and

`(2) the article is for the use of, and not for resale by, such customer,

the delivery of such article to such customer shall be treated as the 1st retail sale of such article for a price equal to its fair market value at t he time of such delivery.

`PART II--RULES OF GENERAL APPLICABILITY

`Sec. 4011. Definitions and special rules.
`SEC. 4011. DEFINITIONS AND SPECIAL RULES.

`(a) 1ST RETAIL SALE- For purposes of this subchapter, the term `1s t retail sale' means the 1st sale, for a purpose other than resale, after manufa cture, production, or importation.

`(b) USE TREATED AS SALE-

`(1) IN GENERAL- If any person uses an article taxable under th is subchapter (including any use after importation) before the 1st retail sale o f such article, then such person shall be liable for tax under this subchapter i n the same manner as if such article were sold at retail by him.

`(2) EXEMPTION FOR FURTHER MANUFACTURE- Paragraph (1) shall not apply to use of an article as material in the manufacture or production of, or as a component part of, another article taxable under this subchapter to be manufactured or produced by him.

`(3) COMPUTATION OF TAX- In the case of any person made lia ble for tax by paragraph (1), the tax shall be computed on the price at which si milar articles are sold at retail in the ordinary course of trade, as determined by the Secretary.

`(c) LEASES CONSIDERED AS SALES- For purposes of this subchapter--

`(1) IN GENERAL- Except as otherwise provided in this subsectio n, the lease of an article (including any renewal or any extension of a lease or any subsequent lease of such article) by any person shall be considered a sale of such article at retail.

`(2) SPECIAL RULES FOR CERTAIN LEASES OF PASSENGER VEHICLES, BO ATS, AND AIRCRAFT-

`(A) TAX NOT IMPOSED ON SALE FOR LEASING IN A QUALIFIED LEA SE- The sale of a passenger vehicle, boat, or aircraft to a person engaged in a leasing or rental trade or business of the article involved for leasing by such person in a qualified lease shall not be treated as the 1st retail sale of such article.

`(B) QUALIFIED LEASE- For purposes of subparagraph (A), the term `qualified lease' means--

`(i) any lease in the case of a boat or an aircraft, an d

`(ii) any long-term lease (as defined in section 4052) in the case of any passenger vehicle.

`(C) SPECIAL RULES- In the case of a qualified lease of an article which is treated as the 1st retail sale of such article--

`(i) DETERMINATION OF PRICE- The tax under this chapter shall be computed on the lowest price for which the article is sold by retailer s in the ordinary course of trade.

`(ii) PAYMENT OF TAX- Rules similar to the rules of sec tion 4217(e)(2) shall apply.

`(iii) NO TAX WHERE EXEMPT USE BY LESSEE- No tax shall be imposed on any lease payment under a qualified lease if the lessee's use of t he article under such lease is an exempt use (as defined in section 4004(c)) of such article.

`(d) DETERMINATION OF PRICE-

`(1) IN GENERAL- In determining price for purposes of this subc hapter--

`(A) there shall be included any charge incident to placing the article in condition ready for use,

`(B) there shall be excluded--

`(i) the amount of the tax imposed by this subchapter,

`(ii) if stated as a separate charge, the amount of any retail sales tax imposed by any State, territory, or political subdivision ther eof or the District of Columbia, whether the liability for such tax is imposed o n the vendor or vendee,

`(iii) the value of any component of such article if--

`(I) such component is furnished by the 1st user of such article, and

`(II) such component has been used before such furn ishing, and

`(C) the price shall be determined without regard to any tr ade-in.

Subparagraph (B)(iii) shall not apply for purposes of the taxes i mposed by sections 4006 and 4007.

`(2) OTHER RULES- Rules similar to the rules of paragraphs (2) and (4) of section 4052(b) shall apply for purposes of this subchapter.

`(e) PARTS AND ACCESSORIES SOLD WITH TAXABLE ARTICLE- Parts and acc essories sold on, in connection with, or with the sale of any article taxable un der this subchapter shall be treated as part of the article.

`(f) PARTIAL PAYMENTS, ETC- In the case of a contract, sale, or arr angement described in paragraph (2), (3), or (4) of section 4216(c), rules simil ar to the rules of section 4217(e)(2), and of section 4216(d), shall apply for p urposes of this subchapter.'

(b) EXEMPTION FOR EXPORTS-

(1) The material preceding paragraph (1) of section 4221(a) is amended by striking `section 4051' and inserting `subchapter A or C of chapter 3 1'.

(2) Subsection (a) of section 4221 is amended by adding at the end thereof the following new sentence: `In the case of taxes imposed by subchap ter A of chapter 31, paragraphs (1), (3), (4), and (5) shall not apply.'

(c) EXEMPTION FOR SALES TO THE UNITED STATES- Section 4293 is amend ed by inserting `subchapter A of chapter 31,' before `section 4041'.

(d) TECHNICAL AMENDMENTS-

(1) Subsection (c) of section 4221 is amended by striking `sect ion 4053(a)(6)' and inserting `section 4001(c), 4002(b), 4003(c), 4004(a), or 40 53(a)(6)'.

(2) Paragraph (1) of section 4221(d) is amended by striking `th e tax imposed by section 4051' and inserting `taxes imposed by subchapter A or C of chapter 31'.

(3) Subsection (d) of section 4222 is amended by striking `sect ions 4053(a)(6)' and inserting `sections 4001(c), 4002(b), 4003(c), 4004(a), 405 3(a)(6)'.

(e) CLERICAL AMENDMENT- The table of subchapters for chapter 31 is amended to read as follows:

`Subchapter A. Certain luxury items.
`Subchapter B. Special fuels.
`Subchapter C. Heavy trucks and trailers.'
(f) EFFECTIVE DATE- The amendments made by this section shall take effect after December 31, 1990, and before January 1, 2000.

Subpart D--Telephone Tax

SEC. 7410. PERMANENT EXTENSION OF TELEPHONE EXCISE TAX.

(a) IN GENERAL- Paragraph (2) of section 4251(b) is amended by stri king `percent;' and all that follows through the period and inserting `percent.'

(b) TIME FOR DEPOSIT OF TELEPHONE EXCISE TAXES- Section 4251 is ame nded by adding at the end thereof the following new subsection:

`(d) TIME FOR DEPOSIT OF TAXES- If, under regulations prescribed by the Secretary, a person is required to make deposits of any tax imposed by this section with respect to amounts considered collected by such person during any semi-monthly period, such deposits shall be made not later than the third day (n ot including Saturdays, Sundays, or legal holidays) after the close of the first week of the second semi-monthly period following the period to which such amoun ts relate.'

(c) ONE-TIME FILING OF TELEPHONE EXCISE TAX EXEMPTION CERTIFICATES- Section 4253 is amended by adding at the end thereof the following new subsecti on:

`(k) FILING OF EXEMPTION CERTIFICATES-

`(1) IN GENERAL- In order to claim an exemption under subsectio n (c), (h), (i), or (j), a person shall provide to the provider of communication s services a statement (in such form and manner as the Secretary may provide) ce rtifying that such person is entitled to such exemption.

`(2) DURATION OF CERTIFICATE- Any statement provided under para graph (1) shall remain in effect until--

`(A) the provider of communications services has actual kno wledge that the information provided in such statement is false, or

`(B) such provider is notified by the Secretary that the pr ovider of the statement is no longer entitled to an exemption described in parag raph (1).

If any information provided in such statement is no longer accura te, the person providing such statement shall inform the provider of communicati ons services within 30 days of any change of information.'

(d) EFFECTIVE DATES-

(1) SUBSECTION (a)- The amendment made by subsection (a) shall take effect on January 1, 1991.

(2) SUBSECTION (b)- The amendment made by subsection (b) shall apply to the payment of taxes considered collected for semi-monthly periods begi nning after December 31, 1990.

(3) SUBSECTION (c)-

(A) IN GENERAL- The amendment made by subsection (c) shall apply to any claim for exemption made after the date of the enactment of this Ac t.

(B) DURATION OF EXISTING CERTIFICATES- Any annual certifica te of exemption effective on the date of the enactment of this Act shall remain effective until the end of the annual period.

PART II--INSURANCE PROVISIONS

Subpart A--Provisions Related to Policy Acquisition Costs

SEC. 7411. CAPITALIZATION OF POLICY ACQUISITION EXPENSES.

(a) GENERAL RULE- Part III of subchapter L of chapter 1 (relating t o provisions of general application) is amended by adding at the end thereof the following new section:

`SEC. 848. CAPITALIZATION OF CERTAIN POLICY ACQUISITION EXPENSES.

`(a) GENERAL RULE- In the case of an insurance company--

`(1) specified policy acquisition expenses for any taxable year shall be capitalized, and

`(2) such expenses shall be allowed as a deduction ratably over the 120-month period beginning with the first month in the second half of such taxable year.

`(b) 5-YEAR AMORTIZATION FOR FIRST $5,000,000 OF SPECIFIED POLICY A CQUISITION EXPENSES-

`(1) IN GENERAL- Paragraph (2) of subsection (a) shall be appli ed with respect to so much of the specified policy acquisition expenses of an in surance company for any taxable year as does not exceed $5,000,000 by substituti ng `60-month' for `120-month'.

`(2) PHASE-OUT- If the specified policy acquisition expenses of an insurance company exceed $10,000,000 for any taxable year, the $5,000,000 am ount under paragraph (1) shall be reduced (but not below zero) by the amount of such excess.

`(3) SPECIAL RULE FOR MEMBERS OF CONTROLLED GROUP- In the case of any controlled group--

`(A) all insurance companies which are members of such grou p shall be treated as 1 person for purposes of this subsection, and

`(B) the amount to which paragraph (1) applies shall be all ocated among such companies in such manner as the Secretary may prescribe.< /ul>

For purposes of the preceding sentence, the term `controlled grou p' means any controlled group of corporations as defined in section 1563(a); exc ept that subsections (a)(4) and (b)(2)(D) of section 1563 shall not apply, and s ubsection (b)(2)(C) of section 1563 shall not apply to the extent it excludes a foreign corporation to which section 842 applies.

`(4) EXCEPTION FOR ACQUISITION EXPENSES ATTRIBUTABLE TO CERTAIN REINSURANCE CONTRACTS- This subsection shall not apply to any specified policy acquisition expenses for any taxable year which are attributable to premiums or other consideration under any reinsurance contract.

`(c) SPECIFIED POLICY ACQUISITION EXPENSES- For purposes of this se ction--

`(1) IN GENERAL- The term `specified policy acquisition expense s' means, with respect to any taxable year, so much of the general deductions fo r such taxable year as does not exceed the sum of--

`(A) 1.85 percent of the net premiums for such taxable year on specified insurance contracts which are annuity contracts,

`(B) 2.2 percent of the net premiums for such taxable year on specified insurance contracts which are group life insurance contracts or non cancellable accident and health insurance contracts, and

`(C) 8.3 percent of the net premiums for such taxable year on specified insurance contracts not described in subparagraph (A) or (B).< /ul>

`(2) GENERAL DEDUCTIONS- The term `general deductions' means th e deductions provided in part VI of subchapter B (sec. 161 and following, relati ng to itemized deductions) and in part I of subchapter D (sec. 401 and following , relating to pension, profit sharing, stock bonus plans, etc.).

`(d) NET PREMIUMS- For purposes of this section--

`(1) IN GENERAL- The term `net premiums' means, with respect to any category of specified insurance contracts set forth in subsection (c)(1), t he excess (if any) of--

`(A) the gross amount of premiums and other consideration o n such contracts, over

`(B) return premiums on such contracts and premiums and oth er consideration incurred for reinsurance of such contracts.

The rules of section 803(b) shall apply for purposes of the prece ding sentence.

`(2) AMOUNTS DETERMINED ON ACCRUAL BASIS- In the case of an ins urance company subject to tax under part II of this subchapter, all computations entering into determinations of net premiums for any taxable year shall be made in the manner required under section 811(a) for life insurance companies.< /ul>

`(3) TREATMENT OF CERTAIN POLICYHOLDER DIVIDENDS AND SIMILAR AM OUNTS- Net premiums shall be determined without regard to section 808(e) and wit hout regard to other similar amounts treated as paid to, and returned by, the po licyholder.

`(4) SPECIAL RULE FOR CERTAIN REINSURANCE- Premiums and other c onsideration incurred for reinsurance shall be taken into account under paragrap h (1)(B) only to the extent such premiums and other consideration are includible in the gross income of an insurance company taxable under this subchapter or ar e subject to tax under this chapter by reason of subpart F of part III of subcha pter N.

`(e) CLASSIFICATION OF CONTRACTS- For purposes of this section--

`(1) SPECIFIED INSURANCE CONTRACT-

`(A) IN GENERAL- Except as otherwise provided in this parag raph, the term `specified insurance contract' means any life insurance, annuity, or noncancellable accident and health insurance contract (or any combination th ereof).

`(B) EXCEPTIONS- The term `specified insurance contract' sh all not include--

`(i) any pension plan contract (as defined in section 8 18(a)),

`(ii) any flight insurance or similar contract, and

`(iii) any qualified foreign contract (as defined in se ction 807(e)(4) without regard to paragraph (5) of this subsection).

`(2) GROUP LIFE INSURANCE CONTRACT- The term `group life insura nce contract' means any life insurance contract--

`(A) which covers a group of individuals defined by referen ce to employment relationship, membership in an organization, or similar factor,

`(B) the premiums for which are determined on a group basis , and

`(C) the proceeds of which are payable to (or for the benef it of) persons other than the employer of the insured, an organization to which the insured belongs, or other similar person.

`(3) TREATMENT OF GUARANTEED RENEWABLE CONTRACTS- The rules of section 816(e) shall apply for purposes of this section.

`(4) TREATMENT OF REINSURANCE CONTRACT- A contract which reinsu res another contract shall be treated in the same manner as the reinsured contra ct.

`(f) Special Rule Where Negative Net Premiums-

`(1) IN GENERAL- If for any taxable year there is a negative ca pitalization amount with respect to any category of specified insurance contract s set forth in subsection (c)(1)--

`(A) the amount otherwise required to be capitalized under this section for such taxable year with respect to any other category of specifi ed insurance contracts shall be reduced (but not below zero) by such negative ca pitalization amount, and

`(B) such negative capitalization amount (to the extent not taken into account under subparagraph (A))--

`(i) shall reduce (but not below zero) the unamortized balance (as of the beginning of such taxable year) of the amounts previously cap italized under subsection (a) (beginning with the amount capitalized for the mos t recent taxable year), and

`(ii) to the extent taken into account as such a reduct ion, shall be allowed as a deduction for such taxable year.
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`(2) NEGATIVE CAPITALIZATION AMOUNT- For purposes of paragraph (1), the term `negative capitalization amount' means, with respect to any catego ry of specified insurance contracts, the percentage (applicable under subsection (c)(1) to such category) of the amount (if any) by which--

`(A) the amount determined under subparagraph (B) of subsec tion (d)(1) with respect to such category, exceeds

`(B) the amount determined under subparagraph (A) of subsec tion (d)(1) with respect to such category.

`(g) TREATMENT OF CERTAIN CEDING COMMISSIONS- Nothing in any provis ion of law (other than this section) shall require the capitalization of any ced ing commission incurred on or after September 30, 1990, under any reinsurance co ntract.

`(h) SECRETARIAL AUTHORITY TO ADJUST CAPITALIZATION AMOUNTS- < /ul>
`(1) IN GENERAL- Except as provided in paragraph (2), the Secre tary may provide that a type of insurance contract will be treated as a separate category for purposes of this section (and prescribe a percentage applicable to such category) if the Secretary determines that the deferral of acquisition exp enses for such type of contract which would otherwise result under this section is substantially greater than the deferral of acquisition expenses which would h ave resulted if actual acquisition expenses (including indirect expenses) and th e actual useful life for such type of contract had been used.

`(2) ADJUSTMENT TO OTHER CONTRACTS- If the Secretary exercises his authority with respect to any type of contract under paragraph (1), the Secr etary shall adjust the percentage which would otherwise have applied under subse ction (c)(1) to the category which includes such type of contract so that the ex ercise of such authority does not result in a decrease in the amount of revenue received under this chapter by reason of this section for any fiscal year.< /ul>

`(i) TREATMENT OF QUALIFIED FOREIGN CONTRACTS UNDER ADJUSTED CURREN T EARNINGS PREFERENCE- For purposes of determining adjusted current earnings und er section 56(g), acquisition expenses with respect to contracts described in cl ause (iii) of subsection (e)(1)(B) shall be capitalized and amortized in accorda nce with the treatment generally required under generally accepted accounting pr inciples as if this subsection applied to such contracts for all taxable years.

`(j) TRANSITIONAL RULE- In the case of any taxable year which inclu des September 30, 1990, the amount taken into account as the net premiums (or ne gative capitalization amount) with respect to any category of specified insuranc e contracts shall be the amount which bears the same ratio to the amount which ( but for this subsection) would be so taken into account as the number of days in such taxable year on or after September 30, 1990, bears to the total number of days in such taxable year.'

(b) REPEAL OF SPECIAL TREATMENT OF ACQUISITION EXPENSES UNDER MINIM UM TAX- Paragraph (4) of section 56(g) is amended by striking subparagraph (F) a nd redesignating subparagraphs (G) and (H) as subparagraphs (F) and (G), respect ively.

(c) CLERICAL AMENDMENT- The table of sections for part III of subch apter L of chapter 1 is amended by adding at the end thereof the following new i tem:

`Sec. 848. Capitalization of certain policy acquisition expenses.'
(d) EFFECTIVE DATE-

(1) IN GENERAL- The amendments made by subsections (a) and (c) shall apply to taxable years ending on or after September 30, 1990. Any capitali zation required by reason of such amendments shall not be treated as a change in method of accounting for purposes of the Internal Revenue Code of 1986.

(2) SUBSECTION (b)-

(A) IN GENERAL- The amendment made by subsection (b) shall apply to taxable years beginning on or after September 30, 1990, except that, in the case of a small insurance company, such amendment shall apply to taxable ye ars beginning after December 31, 1989. For purposes of this paragraph, the term `small insurance company' means any insurance company which meets the requiremen ts of section 806(a)(3) of the Internal Revenue Code of 1986; except that paragr aph (2) of section 806(c) of such Code shall not apply.

(B) SPECIAL RULES FOR YEAR WHICH INCLUDES SEPTEMBER 30, 199 0- In the case of any taxable year which includes September 30, 1990, the amount of acquisition expenses which is required to be capitalized under section 56(g) (4)(F) of the Internal Revenue Code of 1986 (as in effect before the amendment m ade by subsection (b)) by a company which is not a small insurance company shall be the amount which bears the same ratio to the amount which (but for this subp aragraph) would be so required to be capitalized as the number of days in such t axable year before September 30, 1990, bears to the total number of days in such taxable year. A similar reduction shall be made in the amount amortized for suc h taxable year under such section 56(g)(4)(F).

SEC. 7412. TREATMENT OF CERTAIN NONLIFE RESERVES OF LIFE INSURANCE CO MPANIES.

(a) GENERAL RULE- Subsection (e) of section 807 (relating to specia l rules for computing reserves) is amended by adding at the end thereof the foll owing new paragraph:

`(7) SPECIAL RULES FOR TREATMENT OF CERTAIN NONLIFE RESERVES- 

`(A) IN GENERAL- The amount taken into account for purposes of subsection (a) and (b) as--

`(i) the opening balance of the items referred to in su bparagraph (C), and

`(ii) the closing balance of such items,

shall be 80 percent of the amount which (without regard to th is subparagraph) would have been taken into account as such opening or closing b alance, as the case may be.

`(B) TRANSITIONAL RULE-

`(i) IN GENERAL- In the case of any taxable year beginn ing on or after September 30, 1990, and on or before September 30, 1996, there s hall be included in the gross income of any life insurance company an amount equ al to 3 1/3 percent of such company's closing balance of the items referred to in subparagraph (C) for its most recent taxable year beginning before September 30, 1990.

`(ii) TERMINATION AS LIFE INSURANCE COMPANY- Except as provided in section 381(c)(22), if, for any taxable year beginning on or before September 30, 1996, the taxpayer ceases to be a life insurance company, the aggr egate inclusions which would have been made under clause (i) for such taxable ye ar and subsequent taxable years but for such cessation shall be taken into accou nt for the taxable year preceding such cessation year.

`(C) DESCRIPTION OF ITEMS- For purposes of this paragraph, the items referred to in this subparagraph are the items described in subsection (c) which consist of unearned premiums and premiums received in advance under i nsurance contracts not described in section 816(b)(1)(B).'

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall appl y to taxable years beginning on or after September 30, 1990.

SEC. 7413. TREATMENT OF LIFE INSURANCE RESERVES OF INSURANCE COMPANIE S WHICH ARE NOT LIFE INSURANCE COMPANIES.

(a) GENERAL RULE- Paragraph (4) of section 832(b) (defining premium s earned) is amended by striking `section 807, pertaining' and all that follows down through the period at the end of the first sentence which follows subparagr aph (C) and inserting `section 807.'.

(b) TECHNICAL AMENDMENT- Subparagraph (A) of section 832(b)(7) is a mended--

(1) by striking `amounts included in unearned premiums under th e 2nd sentence of such subparagraph' and inserting `insurance contracts describe d in section 816(b)(1)(B)', and

(2) by striking `such amounts into account' and inserting `such contracts into account'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning on or after September 30, 1990.

Subpart B--Treatment of Salvage Recoverable

SEC. 7414. TREATMENT OF SALVAGE RECOVERABLE.

(a) GENERAL RULE- Subparagraph (A) of section 832(b)(5) (defining l osses incurred) is amended to read as follows:

`(A) IN GENERAL- The term `losses incurred' means losses in curred during the taxable year on insurance contracts computed as follows:< /ul>

`(i) To losses paid during the taxable year, deduct sal vage and reinsurance recovered during the taxable year.

`(ii) To the result so obtained, add all unpaid losses on life insurance contracts plus all discounted unpaid losses (as defined in sec tion 846) outstanding at the end of the taxable year and deduct all unpaid losse s on life insurance contracts plus all discounted unpaid losses outstanding at t he end of the preceding taxable year.

`(iii) To the results so obtained, add estimated salvag e and reinsurance recoverable as of the end of the preceding taxable year and de duct estimated salvage and reinsurance recoverable as of the end of the taxable year.

The Secretary shall by regulations provide that the amounts r eferred to in clause (iii) shall be determined on a discounted basis in accordan ce with procedures established in such regulations.'

(b) CONFORMING AMENDMENT- Subsection (g) of section 846 is amended by adding `and' at the end of paragraph (1), by striking paragraph (2), and by r edesignating paragraph (3) as paragraph (2).

(c) EFFECTIVE DATE-

(1) IN GENERAL- The amendments made by this section shall apply to taxable years beginning after December 31, 1989.

(2) AMENDMENTS TREATED AS CHANGE IN METHOD OF ACCOUNTING-

(A) IN GENERAL- In the case of any taxpayer who is required by reason of the amendments made by this section to change his method of comput ing losses incurred--

(i) such change shall be treated as a change in a metho d of accounting,

(ii) such change shall be treated as initiated by the t axpayer, and

(iii) such change shall be treated as having been made with the consent of the Secretary.

(B) ADJUSTMENTS- In applying section 481 of the Internal Re venue Code of 1986 with respect to the change referred to in subparagraph (A)--

(i) only 77 percent of the net amount of adjustments (o therwise required by such section 481 to be taken into account by the taxpayer) shall be taken into account, and

(ii) the portion of such net adjustments which is requi red to be taken into account by the taxpayer (after the application of clause (i )) shall be taken into account over a period not to exceed 4 taxable years begin ning with the taxpayer's 1st taxable year beginning after December 31, 1989.

(3) TREATMENT OF COMPANIES WHICH TOOK INTO ACCOUNT SALVAGE RECO VERABLE- In the case of any insurance company which took into account salvage re coverable in determining losses incurred for its last taxable year beginning bef ore January 1, 1990, 23 percent of the discounted amount of estimated salvage re coverable as of the close of such last taxable year shall be allowed as a deduct ion ratably over its 1st 4 taxable years beginning after December 31, 1989.

(4) SPECIAL RULE FOR OVERESTIMATES- If for any taxable year beg inning after December 31, 1989--

(A) the amount of the section 481 adjustment which would ha ve been required without regard to paragraph (2) and any discounting, exceeds

(B) the sum of the amount of salvage recovered taken into a ccount under section 832(b)(5)(A)(i) for the taxable year and any preceding taxa ble year beginning after December 31, 1989, attributable to losses incurred with respect to any accident year beginning before 1990 and the undiscounted amount of estimated salvage recoverable as of the close of the taxable year on account of such losses,

23 percent of such excess (adjusted by the discount rate used in determining the amount of salvage recoverable as of the close of the last taxabl e year of the taxpayer beginning before January 1, 1990) shall be included in gr oss income for such taxable year.

(5) EFFECT ON EARNINGS AND PROFITS- The earnings and profits of any insurance company for its 1st taxable year beginning after December 31, 198 9, shall be increased by the amount of the section 481 adjustment which would ha ve been required but for paragraph (2). For purposes of applying sections 56, 90 2, 952(c)(1), and 960 of the Internal Revenue Code of 1986, earnings and profits of a corporation shall be determined by applying the principles of paragraph (2 )(B).

Subpart C--Waiver of Estimated Tax Penalties

SEC. 7415. WAIVER OF ESTIMATED TAX PENALTIES.

No addition to tax shall be made under section 6655 of the Internal Revenue Code of 1986 for any period before March 16, 1991, with respect to any underpayment to the extent such underpayment was created or increased by any pro vision of this part.

PART III--COMPLIANCE PROVISIONS

SEC. 7421. SUSPENSION OF STATUTE OF LIMITATIONS DURING PROCEEDINGS TO ENFORCE CERTAIN SUMMONSES.

(a) GENERAL RULE- Section 6503 (relating to suspension of running o f period of limitation) is amended by redesignating subsection (k) as subsection (l) and by inserting after subsection (j) the following new subsection:
`(k) EXTENSION IN CASE OF CERTAIN SUMMONSES-

`(1) IN GENERAL- If any designated summons is issued by the Sec retary with respect to any return of tax, the running of any period of limitatio ns provided in section 6501 on the assessment of such tax shall be suspended--

`(A) during any judicial enforcement period--

`(i) with respect to such summons, or

`(ii) with respect to any other summons which is issued during the 30-day period which begins on the date on which such designated summ ons is issued and which relates to the same return as such designated summons, a nd

`(B) if the court in any proceeding referred to in paragrap h (3) requires any compliance with a summons referred to in subparagraph (A), du ring the 120-day period beginning with the 1st day after the close of the suspen sion under subparagraph (A).

If subparagraph (B) does not apply, such period shall in no event expire before the 60th day after the close of the suspension under subparagraph (A).

`(2) DESIGNATED SUMMONS- For purposes of this subsection--

`(A) IN GENERAL- The term `designated summons' means any su mmons issued for purposes of determining the amount of any tax imposed by this t itle if--

`(i) such summons is issued at least 60 days before the day on which the period prescribed in section 6501 for the assessment of such t ax expires (determined with regard to extensions), and

`(ii) such summons clearly states that it is a designat ed summons for purposes of this subsection.

`(B) LIMITATION- A summons which relates to any return shal l not be treated as a designated summons if a prior summons which relates to suc h return was treated as a designated summons for purposes of this subsection.

`(3) JUDICIAL ENFORCEMENT PERIOD- For purposes of this subsecti on, the term `judicial enforcement period' means, with respect to any summons, t he period--

`(A) which begins on the day on which a court proceeding wi th respect to such summons is brought, and

`(B) which ends on the day on which there is a final resolu tion as to the summoned person's response to such summons.'

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall appl y to any tax (whether imposed before, on, or after the date of the enactment of this Act) if the period prescribed by section 6501 of the Internal Revenue Code of 1986 for the assessment of such tax (determined with regard to extensions) ha s not expired on such date of the enactment.

SEC. 7422. ACCURACY-RELATED PENALTY TO APPLY TO SECTION 482 ADJUSTMEN TS.

(a) GENERAL RULE- Subsection (e) of section 6662 (defining substant ial valuation overstatement under chapter 1) is amended to read as follows:

`(e) SUBSTANTIAL VALUATION MISSTATEMENT UNDER CHAPTER 1-

`(1) IN GENERAL- For purposes of this section, there is a subst antial valuation misstatement under chapter 1 if--

`(A) the value of any property (or the adjusted basis of an y property) claimed on any return of tax imposed by chapter 1 is 200 percent or more of the amount determined to be the correct amount of such valuation or adju sted basis (as the case may be), or

`(B)(i) the price for any property or services claimed on a ny such return in connection with any transaction between persons described in s ection 482 is 200 percent or more (or 50 percent or less) of the amount determin ed under section 482 to be the correct amount of such price, or

`(ii) the net section 482 transfer price adjustment for the taxable year exceeds $10,000,000.

`(2) LIMITATION- No penalty shall be imposed by reason of subse ction (b)(3) unless the portion of the underpayment for the taxable year attribu table to substantial valuation misstatements under chapter 1 exceeds $5,000 ($10 ,000 in the case of a corporation other than an S corporation or a personal hold ing company (as defined in section 542)).

`(3) NET SECTION 482 TRANSFER PRICE ADJUSTMENT- For purposes of this subsection, the term `net section 482 transfer price adjustment' means, wi th respect to any taxable year, the net increase in taxable income for the taxab le year (determined without regard to any amount carried to such taxable year fr om another taxable year) resulting from adjustments under section 482 in the tra nsfer price for any property or services. For purposes of the preceding sentence , rules similar to the rules of the last sentence of section 55(b)(2) shall appl y.'

(b) CONFORMING AMENDMENTS-

(1) Paragraph (3) of section 6662(b) is amended to read as foll ows:

`(3) Any substantial valuation misstatement under chapter 1.'

(2) Subparagraph (A) of section 6662(h)(2) is amended to read a s follows:

`(A) any substantial valuation misstatement under chapter 1 as determined under subsection (e) by substituting--

`(i) `400 percent' for `200 percent' each place it appe ars,

`(ii) `25 percent' for `50 percent', and

`(iii) `$20,000,000' for `$10,000,000','.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years ending after the date of the enactment of this Act.

SEC. 7423. TREATMENT OF PERSONS PROVIDING SERVICES.

(a) GENERAL RULE- Subsection (n) of section 6103 (relating to certa in other persons) is amended--

(1) by striking `and the programming' and inserting `the progra mming', and

(2) by inserting after `of equipment,' the following `and the p roviding of other services,'.

(b) EFFECTIVE DATE- The amendments made by subsection (a) shall tak e effect on the date of the enactment of this Act.

SEC. 7424. APPLICATION OF AMENDMENTS MADE BY SECTION 7403 OF REVENUE RECONCILIATION ACT OF 1989 TO TAXABLE YEARS BEGINNING ON OR BEFORE JULY 10, 1989 .

(a) GENERAL RULE- The amendments made by section 7403 of the Revenu e Reconciliation Act of 1989 shall apply to--

(1) any requirement to furnish information under section 6038A( a) of the Internal Revenue Code of 1986 (as amended by such section 7403) if the time for furnishing such information under such section is after the date of th e enactment of this Act,

(2) any requirement under such section 6038A(a) to maintain rec ords which were in existence on or after March 20, 1990,

(3) any requirement to authorize a corporation to act as a limi ted agent under section 6038A(e)(1) of such Code (as so amended) if the time for authorizing such action is after the date of the enactment of this Act, and

(4) any summons issued after such date of enactment,
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without regard to when the taxable year (to which the information, re cords, authorization, or summons relates) began. Such amendments shall also appl y in any case to which they would apply without regard to this section.

(b) CONTINUATION OF OLD FAILURES- In the case of any failure with r espect to a taxable year beginning on or before July 10, 1989, which first occur s on or before the date of the enactment of this Act but which continues after s uch date of enactment, section 6038A(d)(2) of the Internal Revenue Code of 1986 (as amended by subsection (c) of such section 7403) shall apply for purposes of determining the amount of the penalty imposed for 30-day periods referred to in such section 6038A(d)(2) which begin after the date of the enactment of this Act .

SEC. 7425. OTHER REPORTING REQUIREMENTS.

(a) GENERAL RULE- Subpart A of part III of subchapter A of chapter 61 (relating to information concerning persons subject to special provisions) is amended by inserting after section 6038B the following new section:

`SEC. 6038C. INFORMATION WITH RESPECT TO FOREIGN CORPORATIONS ENGAGED IN U.S. BUSINESS.

`(a) REQUIREMENT- If a foreign corporation (hereinafter in this sec tion referred to as the `reporting corporation') is engaged in a trade or busine ss within the United States at any time during a taxable year--

`(1) such corporation shall furnish (at such time and in such m anner as the Secretary shall by regulations prescribe) the information described in subsection (b), and

`(2) such corporation shall maintain (at the location, in the m anner, and to the extent prescribed in regulations) such records as may be appro priate to determine the liability of such corporation for tax under this title a s the Secretary shall by regulations prescribe (or shall cause another person to so maintain such records).

`(b) REQUIRED INFORMATION- For purposes of subsection (a), the info rmation described in this subsection is--

`(1) the information described in section 6038A(b), and

`(2) such other information as the Secretary may prescribe by r egulations relating to any item not directly connected with a transaction for wh ich information is required under paragraph (1).

`(c) PENALTY FOR FAILURE TO FURNISH INFORMATION OR MAINTAIN RECORDS - The provisions of subsection (d) of section 6038A shall apply to--

`(1) any failure to furnish (within the time prescribed by regu lations) any information described in subsection (b), and

`(2) any failure to maintain (or cause another to maintain) rec ords as required by subsection (a),

in the same manner as if such failure were a failure to comply with t he provisions of section 6038A.

`(d) ENFORCEMENT OF REQUESTS FOR CERTAIN RECORDS-

`(1) AGREEMENT TO TREAT CORPORATION AS AGENT- The rules of para graph (3) shall apply to any transaction between the reporting corporation and a ny related party who is a foreign person unless such related party agrees (in su ch manner and at such time as the Secretary shall prescribe) to authorize the re porting corporation to act as such related party's limited agent solely for purp oses of applying sections 7602, 7603, and 7604 with respect to any request by th e Secretary to examine records or produce testimony related to any such transact ion or with respect to any summons by the Secretary for such records or testimon y. The appearance of persons or production of records by reason of the reporting corporation being such an agent shall not subject such persons or records to le gal process for any purpose other than determining the correct treatment under t his title of any transaction between the reporting corporation and such related party.

`(2) RULES WHERE INFORMATION NOT FURNISHED- If--

`(A) for purposes of determining the amount of the reportin g corporation's liability for tax under this title, the Secretary issues a summo ns to such corporation to produce (either directly or as an agent for a related party who is a foreign person) any records or testimony,

`(B) such summons is not quashed in a proceeding begun unde r paragraph (4) of section 6038A(e) (as made applicable by paragraph (4) of this subsection) and is not determined to be invalid in a proceeding begun under sec tion 7604(b) to enforce such summons, and

`(C) the reporting corporation does not substantially compl y in a timely manner with such summons and the Secretary has sent by certified o r registered mail a notice to such reporting corporation that such reporting cor poration has not so substantially complied,

the Secretary may apply the rules of paragraph (3) with respect t o any transaction or item to which such summons relates (whether or not the Secr etary begins a proceeding to enforce such summons). If the reporting corporation fails to maintain (or cause another to maintain) records as required by subsect ion (a), and by reason of that failure, the summons is quashed in a proceeding d escribed in subparagraph (B) or the reporting corporation is not able to provide the records requested in the summons, the Secretary may apply the rules of para graph (3) with respect to any transaction or item to which the records relate.

`(3) APPLICABLE RULES- If the rules of this paragraph apply to any transaction or item, the treatment of such transaction (or the amount and tr eatment of any such item) shall be determined by the Secretary in the Secretary' s sole discretion from the Secretary's own knowledge or from such information as the Secretary may obtain through testimony or otherwise.

`(4) JUDICIAL PROCEEDINGS- The provisions of section 6038A(e)(4 ) shall apply with respect to any summons issued under paragraph (2)(A); except that subparagraph (D) of such section shall be applied by substituting `transact ion or item' for `transaction'.

`(e) DEFINITIONS- For purposes of this section, the terms `related party', `foreign person', and `records' have the respective meanings given to su ch terms by section 6038A(c).'

(b) CONFORMING AMENDMENTS-

(1) Paragraph (1) of section 6038A(a) is amended by striking `o r is a foreign corporation engaged in trade or business within the United States '.

(2) The table of sections for subpart A of part III of subchapt er A of chapter 61 is amended by inserting after the item relating to section 60 38B the following new item:

`Sec. 6038C. Information with respect to foreign corporations engaged in U.S. business.'
(c) EFFECTIVE DATE- The amendments made by this section shall apply to--

(1) any requirement to furnish information under section 6038C( a) of the Internal Revenue Code of 1986 (as added by this section) if the time f or furnishing such information under such section is after the date of the enact ment of this Act,

(2) any requirement under such section 6038C(a) to maintain rec ords which were in existence on or after March 20, 1990,

(3) any requirement to authorize a corporation to act as a limi ted agent under section 6038C(d)(1) of such Code (as so added) if the time for a uthorizing such action is after the date of the enactment of this Act, and< /ul>

(4) any summons issued after such date of enactment,
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without regard to when the taxable year (to which the information, re cords, authorization, or summons relates) began.

SEC. 7426. STUDY OF SECTION 482.

(a) GENERAL RULE- The Secretary of the Treasury or his delegate sha ll conduct a study of the application and administration of section 482 of the I nternal Revenue Code of 1986. Such study shall include examination of--

(1) the effectiveness of the amendments made by this part in in creasing levels of compliance with such section 482,

(2) use of advanced determination agreements with respect to is sues under such section 482,

(3) possible legislative or administrative changes to assist th e Internal Revenue Service in increasing compliance with such section 482, and

(4) coordination of the administration of such section 482 with similar provisions of foreign tax laws and with domestic nontax laws.

(b) REPORT- Not later than March 1, 1992, the Secretary of the Trea sury or his delegate shall submit to the Committee on Ways and Means of the Hous e of Representatives and the Committee on Finance of the Senate a report on the study conducted under subsection (a), together with such recommendations as he m ay deem advisable.

PART IV--EMPLOYER REVERSIONS

Subpart A--Treatment of Reversions of Qualified Plan Assets to Em ployers

SEC. 7431. INCREASE IN REVERSION TAX.

Section 4980(a) (relating to tax on reversion of qualified plan ass ets to employer) is amended by striking `15 percent' and inserting `20 percent'.

SEC. 7432. ADDITIONAL TAX IF NO REPLACEMENT PLAN.

(a) IN GENERAL- Section 4980 is amended by adding at the end thereo f the following new subsection:

`(d) INCREASE IN TAX FOR FAILURE TO ESTABLISH REPLACEMENT PLAN OR I NCREASE BENEFITS-

`(1) IN GENERAL- Subsection (a) shall be applied by substitutin g `40 percent' for `20 percent' with respect to any employer reversion from a qu alified plan unless--

`(A) the employer establishes or maintains a qualified repl acement plan, or

`(B) the plan provides benefit increases meeting the requir ements of paragraph (3).

`(2) QUALIFIED REPLACEMENT PLAN- For purposes of this subsectio n, the term `qualified replacement plan' means a qualified plan established or m aintained by the employer in connection with a qualified plan termination (herei nafter referred to as the `replacement plan') with respect to which the followin g requirements are met:

`(A) PARTICIPATION REQUIREMENT- Substantially all of the ac tive participants in the terminated plan who remain as employees of the employer after the termination are active participants in the replacement plan.

`(B) ASSET TRANSFER REQUIREMENT-

`(i) 20 PERCENT CUSHION- A direct transfer from the ter minated plan to the replacement plan is made before any employer reversion, and the transfer is in an amount equal to the excess (if any) of--

`(I) 20 percent of the maximum amount which the emp loyer could receive as an employer reversion without regard to this subsection, over

`(II) the amount determined under clause (ii).

`(ii) REDUCTION FOR INCREASE IN BENEFITS- The amount de termined under this clause is an amount equal to the present value of the aggreg ate increases in the nonforfeitable accrued benefits under the terminated plan o f any participants (including nonactive participants) pursuant to a plan amendme nt which--

`(I) is adopted during the 60-day period ending on the date of termination of the qualified plan, and

`(II) takes effect immediately on the termination d ate.

`(iii) TREATMENT OF AMOUNT TRANSFERRED- In the case of the transfer of any amount under clause (i)--

`(I) such amount shall not be includible in the gro ss income of the employer,

`(II) no deduction shall be allowable with respect to such transfer, and

`(III) such transfer shall not be treated as an emp loyer reversion for purposes of this section.

`(C) ALLOCATION REQUIREMENTS-

`(i) IN GENERAL- In the case of any defined contributio n plan, the portion of the amount transferred to the replacement plan under subp aragraph (B)(i) is--

`(I) allocated under the plan to the accounts of pa rticipants in the plan year in which the transfer occurs, or

`(II) credited to a suspense account and allocated from such account to accounts of participants no less rapidly than ratably over the 7-plan-year period beginning with the year of the transfer.

`(ii) COORDINATION WITH SECTION 415 LIMITATION- If, by reason of any limitation under section 415, any amount credited to a suspense ac count under clause (i)(II) may not be allocated to a participant before the clos e of the 7-year period under such clause--

`(I) such amount shall be allocated to the accounts of other participants, and

`(II) if any portion of such amount may not be allo cated to other participants by reason of any such limitation, shall be allocated to the participant as provided in section 415.

`(iii) TREATMENT OF INCOME- Any income on any amount cr edited to a suspense account under clause (i)(II) shall be allocated to accounts of participants no less rapidly than ratably over the remainder of the period d etermined under such clause (after application of clause (ii)).

`(iv) UNALLOCATED AMOUNTS AT TERMINATION- If any amount credited to a suspense account under clause (i)(II) is not allocated as of the termination date of the plan--

`(I) such amount shall be allocated to the accounts of participants as of such date, except that any amount which may not be alloca ted by reason of any limitation under section 415 shall be allocated to the acco unts of other participants, and

`(II) if any portion of such amount may not be allo cated to other participants under subclause (I) by reason of such limitation, su ch portion shall be treated as an employer reversion to which this section appli es.

`(3) PRO RATA BENEFIT INCREASES-

`(A) IN GENERAL- The requirements of this paragraph are met if a plan amendment to the terminated plan is adopted in connection with the te rmination of the plan which provides pro rata increases in the nonforfeitable ac crued benefits of all participants (including nonactive participants) which--

`(i) have an aggregate present value not less than 15 p ercent of the maximum amount which the employer could receive as an employer rev ersion without regard to this subsection, and

`(ii) take effect immediately on the termination date.

`(B) PRO RATA INCREASE- For purposes of subparagraph (A), a pro rata increase is an increase in the present value of the nonforfeitable acc rued benefit of each participant (including nonactive participants) in an amount which bears the same ratio to the aggregate amount determined under subparagrap h (A)(i) as--

`(i) the present value of such participant's nonforfeit able accrued benefit (determined without regard to this subsection), bears to

`(ii) the aggregate present value of nonforfeitable acc rued benefits of the terminated plan (as so determined).

Notwithstanding the preceding sentence, the aggregate increas es in the nonforfeitable accrued benefits of nonactive participants shall not ex ceed 40 percent of the aggregate amount determined under subparagraph (A)(i) by substituting `equal to' for `not less than'.

`(4) Coordination with other provisions-

`(A) LIMITATIONS- A benefit may not be increased under para graph (2)(B)(ii) or (3)(A), and an amount may not be allocated to a participant under paragraph (2)(C), if such increase or allocation would result in a failure to meet any requirement under section 401(a)(4) or 415.

`(B) TREATMENT AS EMPLOYER CONTRIBUTIONS- Any increase in b enefits under paragraph (2)(B)(ii) or (3)(A), or any allocation of any amount (o r income allocable thereto) to any account under paragraph (2)(C), shall be trea ted as an annual benefit or annual addition for purposes of section 415.

`(C) 10-YEAR PARTICIPATION REQUIREMENT- Except as provided by the Secretary, section 415(b)(5)(D) shall not apply to any increase in benefi ts by reason of this subsection to the extent that the application of this subpa ragraph does not discriminate in favor of highly compensated employees (as defin ed in section 414(q)).

`(5) DEFINITIONS AND SPECIAL RULES- For purposes of this subsec tion--

`(A) NONACTIVE PARTICIPANT- The term `nonactive participant ' means an individual who--

`(i) is a participant in pay status as of the terminati on date,

`(ii) is a beneficiary who has a nonforfeitable right t o an accrued benefit under the terminated plan as of the termination date, or

`(iii) is a participant not described in clause (i) or (ii)--

`(I) who has a nonforfeitable right to an accrued b enefit under the terminated plan as of the termination date, and

`(II) whose service, which was creditable under the terminated plan, terminated during the period beginning 3 years before the term ination date and ending with the date on which the final distribution of assets occurs.

`(B) PRESENT VALUE- Present value shall be determined as of the termination date and on the same basis as liabilities of the plan are deter mined on termination.

`(C) REALLOCATION OF INCREASE- Except as provided in paragr aph (2)(C), if any benefit increase is reduced by reason of the last sentence of paragraph (3)(A)(ii) or paragraph (4), the amount of such reduction shall be al located to the remaining participants on the same basis as other increases (and shall be treated as meeting any allocation requirement of this subsection).

`(D) AGGREGATION OF PLANS- The Secretary may provide that 2 or more plans may be treated as 1 plan for purposes of determining whether ther e is a qualified replacement plan under paragraph (2).

`(6) SUBSECTION NOT TO APPLY TO EMPLOYER IN BANKRUPTCY- This su bsection shall not apply to an employer who, as of the termination date of the q ualified plan, is in bankruptcy liquidation under chapter 7 of title 11 of the U nited States Code or in similar proceedings under State law.'

(b) AMENDMENTS TO EMPLOYEE RETIREMENT INCOME SECURITY ACT-
(1) FIDUCIARY RESPONSIBILITY- Section 404 of the Employee Retir ement Income Security Act of 1974 (29 U.S.C. 1104) is amended by adding at the e nd thereof the following new subsection:

`(d)(1) If, in connection with the termination of a single-employer plan, an employer elects to establish or maintain a qualified replacement plan, or to increase benefits, as provided under section 4980(d) of the Internal Reve nue Code of 1986, a fiduciary shall discharge the fiduciary's duties under this title and title IV in accordance with the following requirements:

`(A) In the case of a fiduciary of the terminated plan, any req uirement--

`(i) under section 4980(d)(2)(B) of such Code with respect to the transfer of assets from the terminated plan to a qualified replacement pl an, and

`(ii) under section 4980(d)(2)(B)(ii) or 4980(d)(3) of such Code with respect to any increase in benefits under the terminated plan.

`(B) In the case of a fiduciary of a qualified replacement plan , any requirement--

`(i) under section 4980(d)(2)(A) of such Code with respect to participation in the qualified replacement plan of active participants in the terminated plan,

`(ii) under section 4980(d)(2)(B) of such Code with respect to the receipt of assets from the terminated plan, and

`(iii) under section 4980(d)(2)(C) of such Code with respec t to the allocation of assets to participants of the qualified replacement plan.

`(2) For purposes of this subsection--

`(A) any term used in this subsection which is also used in sec tion 4980(d) of the Internal Revenue Code of 1986 shall have the same meaning as when used in such section, and

`(B) any reference in this subsection to the Internal Revenue C ode of 1986 shall be a reference to such Code as in effect on January 1, 1991.'

(2) Conforming amendments-

(A) Section 404(a)(1)(D) of such Act (29 U.S.C. 1104(a)(1)( D)) is amended by striking `or title IV' and inserting `and title IV'.

(B) Section 4044(d)(1) of such Act (29 U.S.C. 1344(d)(1)) i s amended by inserting `, section 404(d) of this Act, and section 4980(d) of the Internal Revenue Code of 1986 (as in effect on January 1, 1991)' after `paragra ph (3)'.

SEC. 7433. EFFECTIVE DATE.

(a) IN GENERAL- Except as provided in subsection (b), the amendment s made by this subpart shall apply to reversions occurring after September 30, 1 990.

(b) EXCEPTION- The amendments made by this subpart shall not apply to any reversion after September 30, 1990, if--

(1) in the case of plans subject to title IV of the Employee Re tirement Income Security Act of 1974, a notice of intent to terminate under such title was provided to participants (or if no participants, to the Pension Benef it Guaranty Corporation) before October 1, 1990, or

(2) in the case of plans subject to title I (and not to title I V) of such Act, a notice of intent to reduce future accruals under section 204(h ) of such Act was provided to participants in connection with the termination be fore October 1, 1990.

Subpart B--Transfers to Retiree Health Accounts

SEC. 7434. TRANSFER OF EXCESS PENSION ASSETS TO RETIREE HEALTH ACCOUN TS.

(a) IN GENERAL- Part I of subchapter D of chapter 1 (relating to pe nsion, profit-sharing, and stock bonus plans) is amended by adding at the end th ereof the following new subpart:

`Subpart E--Treatment of Transfers to Retiree Health Accounts

`Sec. 420. Transfers of excess pension assets to retiree health a ccounts.

`SEC. 420. TRANSFERS OF EXCESS PENSION ASSETS TO RETIREE HEALTH ACCOU NTS.

`(a) GENERAL RULE- If there is a qualified transfer of any excess p ension assets of a defined benefit plan (other than a multiemployer plan) to a h ealth benefits account which is part of such plan--

`(1) a trust which is part of such plan shall not be treated as failing to meet the requirements of subsection (a) or (h) of section 401 solely by reason of such transfer (or any other action authorized under this section),

`(2) no amount shall be includible in the gross income of the e mployer maintaining the plan solely by reason of such transfer,

`(3) such transfer shall not be treated--

`(A) as an employer reversion for purposes of section 4980, or

`(B) as a prohibited transaction for purposes of section 49 75, and

`(4) the limitations of subsection (d) shall apply to such empl oyer.

`(b) QUALIFIED TRANSFER- For purposes of this section--

`(1) IN GENERAL- The term `qualified transfer' means a transfer --

`(A) of excess pension assets of a defined benefit plan to a health benefits account which is part of such plan in a taxable year beginning after December 31, 1990,

`(B) which does not contravene any other provision of law, and

`(C) with respect to which the plan meets--
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`(i) the use requirements of subsection (c)(1),

`(ii) the vesting requirements of subsection (c)(2), an d

`(iii) the minimum benefit requirements of subsection ( c)(3).

`(2) Only 1 transfer per year-

`(A) IN GENERAL- No more than 1 transfer with respect to an y plan during a taxable year may be treated as a qualified transfer for purposes of this section.

`(B) EXCEPTION- A transfer described in paragraph (4) shall not be taken into account for purposes of subparagraph (A).

`(3) LIMITATION ON AMOUNT TRANSFERRED- The amount of excess pen sion assets which may be transferred in a qualified transfer shall not exceed th e amount which is reasonably estimated to be the amount the employer maintaining the plan will pay (whether directly or through reimbursement) out of such accou nt during the taxable year of the transfer for qualified current retiree health liabilities.

`(4) Special rule for 1990-

`(A) IN GENERAL- Subject to the provisions of subsection (c ), a transfer shall be treated as a qualified transfer if such transfer--

`(i) is made after the close of the taxable year preced ing the employer's first taxable year beginning after December 31, 1990, and bef ore the earlier of--

`(I) the due date (including extensions) for the fi ling of the return of tax for such preceding taxable year, or

`(II) the date such return is filed, and
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`(ii) does not exceed the expenditures of the employer for qualified current retiree health liabilities for such preceding taxable year .

`(B) REDUCTION IN DEDUCTION- The amount of the deductions o therwise allowable under this chapter to an employer for the taxable year preced ing the employer's first taxable year beginning after December 31, 1990, shall b e reduced by the amount of any qualified transfer to which this paragraph applie s.

`(C) COORDINATION WITH REDUCTION RULE- Subsection (e)(1)(B) shall not apply to a transfer described in subparagraph (A).

`(5) EXPIRATION- No transfer in any taxable year beginning afte r December 31, 1995, shall be treated as a qualified transfer.

`(c) Requirements of Plans Transferring Assets-

`(1) USE OF TRANSFERRED ASSETS-

`(A) IN GENERAL- Any assets transferred to a health benefit s account in a qualified transfer (and any income allocable thereto) shall be us ed only to pay qualified current retiree health liabilities (other than liabilit ies of key employees not taken into account under subsection (e)(1)(D)) for the taxable year of the transfer (whether directly or through reimbursement).

`(B) Amounts not used to pay for health benefits-

`(i) IN GENERAL- Any assets transferred to a health ben efits account in a qualified transfer (and any income allocable thereto) which a re not used as provided in subparagraph (A) shall be transferred out of the acco unt to the transferor plan.

`(ii) TAX TREATMENT OF AMOUNTS- Any amount transferred out of an account under clause (i)--

`(I) shall not be includible in the gross income of the employer for such taxable year, but

`(II) shall be treated as an employer reversion for purposes of section 4980 (without regard to subsection (d) thereof).
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`(C) ORDERING RULE- For purposes of this section, any amoun t paid out of a health benefits account shall be treated as paid first out of th e assets and income described in subparagraph (A).

`(2) REQUIREMENTS RELATING TO PENSION BENEFITS ACCRUING BEFORE TRANSFER-

`(A) IN GENERAL- The requirements of this paragraph are met if the plan provides that the accrued pension benefits of any participant or be neficiary under the plan become nonforfeitable in the same manner which would be required if the plan had terminated immediately before the qualified transfer ( or in the case of a participant who separated during the 1-year period ending on the date of the transfer, immediately before such separation).

`(B) SPECIAL RULE FOR 1990- In the case of a qualified tran sfer described in subsection (b)(4), the requirements of this paragraph are met with respect to any participant who separated from service during the taxable ye ar to which such transfer relates by recomputing such participant's benefits as if subparagraph (A) had applied immediately before such separation.

`(3) MINIMUM COST REQUIREMENTS-

`(A) IN GENERAL- The requirements of this paragraph are met if each group health plan or arrangement under which applicable health benefits are provided provides that the applicable employer cost for each taxable year d uring the cost maintenance period shall not be less than the higher of the appli cable employer costs for each of the 2 taxable years immediately preceding the t axable year of the qualified transfer.

`(B) APPLICABLE EMPLOYER COST- For purposes of this paragra ph, the term `applicable employer cost' means, with respect to any taxable year, the amount determined by dividing--

`(i) the qualified current retiree health liabilities o f the employer for such taxable year determined--

`(I) without regard to any reduction under subsecti on (e)(1)(B), and

`(II) in the case of a taxable year in which there was no qualified transfer, in the same manner as if there had been such a transf er at the end of the taxable year, by

`(ii) the number of individuals to whom coverage for ap plicable health benefits was provided during such taxable year.

`(C) ELECTION TO COMPUTE COST SEPARATELY- An employer may e lect to have this paragraph applied separately with respect to individuals eligi ble for benefits under title XVIII of the Social Security Act at any time during the taxable year and with respect to individuals not so eligible.

`(D) COST MAINTENANCE PERIOD- For purposes of this paragrap h, the term `cost maintenance period' means the 5 taxable year period beginning with the taxable year in which the qualified transfer occurs. If a taxable year is in 2 or more overlapping cost maintenance periods, this paragraph shall be ap plied by taking into account the highest applicable employer cost required to be provided under subparagraph (A) for such taxable year.

`(d) LIMITATIONS ON EMPLOYER- For purposes of this title--

`(1) DEDUCTION LIMITATIONS- No deduction shall be allowed--

`(A) for the transfer of any amount to a health benefits ac count in a qualified transfer (or any retransfer to the plan under subsection (c )(1)(B)),

`(B) for qualified current retiree health liabilities paid out of the assets (and income) described in subsection (c)(1), or

`(C) for any amounts to which subparagraph (B) does not app ly and which are paid for qualified current retiree health liabilities for the t axable year to the extent such amounts are not greater than the excess (if any) of--

`(i) the amount determined under subparagraph (A) (and income allocable thereto), over

`(ii) the amount determined under subparagraph (B).

`(2) NO CONTRIBUTIONS ALLOWED- An employer may not contribute a fter December 31, 1990, any amount to a health benefits account or welfare benef it fund (as defined in section 419(e)(1)) with respect to qualified current reti ree health liabilities for which transferred assets are required to be used unde r subsection (c)(1).

`(e) DEFINITION AND SPECIAL RULES- For purposes of this section--

`(1) QUALIFIED CURRENT RETIREE HEALTH LIABILITIES- For purposes of this section--

`(A) IN GENERAL- The term `qualified current retiree health liabilities' means, with respect to any taxable year, the aggregate amounts (in cluding administrative expenses) which would have been allowable as a deduction to the employer for such taxable year with respect to applicable health benefits provided during such taxable year if--

`(i) such benefits were provided directly by the employ er, and

`(ii) the employer used the cash receipts and disbursem ents method of accounting.

For purposes of the preceding sentence, the rule of section 4 19(c)(3)(B) shall apply.

`(B) REDUCTIONS FOR AMOUNTS PREVIOUSLY SET ASIDE- The amoun t determined under subparagraph (A) shall be reduced by any amount previously co ntributed to a health benefits account or welfare benefit fund (as defined in se ction 419(e)(1)) to pay for the qualified current retiree health liabilities. Th e portion of any reserves remaining as of the close of December 31, 1990, shall be allocated on a pro rata basis to qualified current retiree health liabilities .

`(C) APPLICABLE HEALTH BENEFITS- The term `applicable healt h benefits' mean health benefits or coverage which are provided to--

`(i) retired employees who, immediately before the qual ified transfer, are entitled to receive such benefits upon retirement and who ar e entitled to pension benefits under the plan, and

`(ii) their spouses and dependents.

`(D) KEY EMPLOYEES EXCLUDED- If an employee is a key employ ee (within the meaning of section 416(i)(1)) with respect to any plan year endin g in a taxable year, such employee shall not be taken into account in computing qualified current retiree health liabilities for such taxable year or in calcula ting applicable employer cost under subsection (c)(3)(B).

`(2) EXCESS PENSION ASSETS- The term `excess pension assets' me ans the excess (if any) of--

`(A) the amount determined under section 412(c)(7)(A)(ii), over

`(B) the greater of--

`(i) the amount determined under section 412(c)(7)(A)(i ), or

`(ii) 125 percent of current liability (as defined in s ection 412(c)(7)(B)).

The determination under this paragraph shall be made as of the mo st recent valuation date of the plan preceding the qualified transfer.

`(3) HEALTH BENEFITS ACCOUNT- The term `health benefits account ' means an account established and maintained under section 401(h).

`(4) COORDINATION WITH SECTION 412- In the case of a qualified transfer to a health benefits account--

`(A) any assets transferred in a plan year after the valuat ion date for such year (and any income allocable thereto) shall, for purposes of section 412(c)(7), be treated as assets in the plan as of the valuation date fo r the following year, and

`(B) the plan shall be treated as having a net experience l oss under section 412(b)(2)(B)(iv) for the first plan year after the plan year i n which such transfer occurs in an amount equal to the amount of such transfer ( reduced by any amounts transferred back to the pension plan under subsection (c) (1)(B)), except that such section shall be applied to such amount by substitutin g `10 plan years' for `5 plan years'.'

(b) CONFORMING AMENDMENT- Section 401(h) is amended by inserting `, and subject to the provisions of section 420' after `Secretary'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to transfers in taxable years beginning after December 31, 1990.

SEC. 7435. APPLICATION OF ERISA TO TRANSFERS OF EXCESS PENSION ASSETS TO RETIREE HEALTH ACCOUNTS.

(a) EXCLUSIVE BENEFIT REQUIREMENT- Section 403(c)(1) of the Employe e Retirement Income Security Act of 1974 (29 U.S.C. 1103(c)(1)) is amended by in serting `, or under section 420 of the Internal Revenue Code of 1986 (as in effe ct on January 1, 1991)' after `insured plans)'.

(b) FIDUCIARY DUTIES- Section 404(a)(1) of such Act (29 U.S.C. 1104 (a)(1)) is amended by inserting `and subject to section 420 of the Internal Reve nue Code of 1986 (as in effect on January 1, 1991),' after `4044,'.

(c) EXEMPTIONS FROM PROHIBITED TRANSACTIONS- Section 408(b) of such Act (29 U.S.C. 1108(b)) is amended by adding at the end thereof the following n ew paragraph:

`(13) Any transfer in a taxable year beginning before January 1 , 1996, of excess pension assets from a defined benefit plan to a retiree health account in a qualified transfer permitted under section 420 of the Internal Rev enue Code of 1986 (as in effect on January 1, 1991).'

(d) FUNDING LIMITATIONS- Section 302 of such Act (29 U.S.C. 1082) i s amended by redesignating subsection (g) as subsection (h) and by adding at the end thereof the following new subsection:

`(g) QUALIFIED TRANSFERS TO HEALTH BENEFIT ACCOUNTS- For purposes o f this section, in the case of a qualified transfer (as defined in section 420 o f the Internal Revenue Code of 1986)--

`(1) any assets transferred in a plan year after the valuation date for such year (and any income allocable thereto) shall, for purposes of sub section (c)(7), be treated as assets in the plan as of the valuation date for th e following year, and

`(2) the plan shall be treated as having a net experience loss under subsection (b)(2)(B)(iv) for the first plan year after the plan year in wh ich such transfer occurs in an amount equal to the amount of such transfer (redu ced by any amounts transferred back to the plan under section 420(c)(1)(B) of su ch Code), except that such subsection shall be applied to such amount by substit uting `10 plan years' for `5 plan years'.'

(e) NOTICE REQUIREMENTS-

(1) IN GENERAL- Section 101 of such Act (29 U.S.C. 1021) is ame nded by redesignating subsection (e) as subsection (f) and by inserting after su bsection (d) the following new subsection:

`(e) Notice of Transfer of Excess Pension Assets to Health Benefits Accounts-

`(1) NOTICE TO PARTICIPANTS- Not later than 60 days before the date of a qualified transfer by an employee pension benefit plan of excess pensi on assets to a health benefits account, the administrator of the plan shall noti fy (in such manner as the Secretary may prescribe) each participant and benefici ary under the plan of such transfer. Such notice shall include information with respect to the amount of excess pension assets, the portion to be transferred, t he amount of health benefits liabilities to be funded with the assets transferre d, and the amount of pension benefits of the participant which will be vested im mediately after the transfer.

`(2) Notice to secretaries, administrator, and employee organiz ations-

`(A) IN GENERAL- Not later than 60 days before the date of any qualified transfer by an employee pension benefit plan of excess pension ass ets to a health benefits account, the employer maintaining the plan from which t he transfer is made shall provide the Secretary, the Secretary of the Treasury, the administrator, and each employee organization representing participants in t he plan a written notice of such transfer. A copy of any such notice shall be av ailable for inspection in the principal office of the administrator.

`(B) INFORMATION RELATING TO TRANSFER- Such notice shall id entify the plan from which the transfer is made, the amount of the transfer, a d etailed accounting of assets projected to be held by the plan immediately before and immediately after the transfer, and the current liabilities under the plan at the time of the transfer.

`(C) AUTHORITY FOR ADDITIONAL REPORTING REQUIREMENTS- The S ecretary may prescribe such additional reporting requirements as may be necessar y to carry out the purposes of this section.

`(3) DEFINITIONS- For purposes of paragraph (1), any term used in such paragraph which is also used in section 420 of the Internal Revenue Cod e of 1986 (as in effect on January 1, 1991) shall have the same meaning as when used in such section.'

(2) Penalties-

(A) Section 502(c)(1) of such Act (29 U.S.C. 1132(c)(1)) is amended by inserting `or section 101(e)(1)' after `section 606'.

(B) Section 502(c)(3) of such Act (29 U.S.C. 1132(c)(3)) is amended--

(i) by inserting `or who fails to meet the requirements of section 101(e)(2) with respect to any person' after `beneficiary' the first place it appears, and

(ii) by inserting `or to such person' after `beneficiar y' the second place it appears.

(f) EFFECTIVE DATE- The amendments made by this section shall apply to qualified transfers under section 420 of the Internal Revenue Code of 1986 m ade after the date of the enactment of this Act.

PART V--CORPORATE PROVISIONS

SEC. 7441. RECOGNITION OF GAIN BY DISTRIBUTING CORPORATION IN CERTAIN SECTION 355 TRANSACTIONS.

(a) GENERAL RULE- Section 355 (relating to distribution of stock an d securities of a controlled corporation) is amended by striking subsection (c) and inserting the following new subsections:

`(c) TAXABILITY OF CORPORATION ON DISTRIBUTION-

`(1) IN GENERAL- Except as provided in paragraph (2), no gain o r loss shall be recognized to a corporation on any distribution to which this se ction (or so much of section 356 as relates to this section) applies and which i s not in pursuance of a plan of reorganization.

`(2) DISTRIBUTION OF APPRECIATED PROPERTY-

`(A) IN GENERAL- If--

`(i) in a distribution referred to in paragraph (1), th e corporation distributes property other than qualified property, and
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`(ii) the fair market value of such property exceeds it s adjusted basis (in the hands of the distributing corporation),
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then gain shall be recognized to the distributing corporation as if such property were sold to the distributee at its fair market value.

`(B) QUALIFIED PROPERTY- For purposes of subparagraph (A), the term `qualified property' means any stock or securities in the controlled co rporation.

`(C) TREATMENT OF LIABILITIES- If any property distributed in the distribution referred to in paragraph (1) is subject to a liability or th e shareholder assumes a liability of the distributing corporation in connection with the distribution, then, for purposes of subparagraph (A), the fair market v alue of such property shall be treated as not less than the amount of such liabi lity.

`(3) Coordination with sections 311 and 336(a)- Sections 311 an d 336(a) shall not apply to any distribution referred to in paragraph (1).< /ul>

`(d) RECOGNITION OF GAIN ON CERTAIN DISTRIBUTIONS OF STOCK OR SECUR ITIES IN CONTROLLED CORPORATION-

`(1) IN GENERAL- In the case of a disqualified distribution, an y stock or securities in the controlled corporation shall not be treated as qual ified property for purposes of subsection (c)(2) of this section or section 361( c)(2).

`(2) DISQUALIFIED DISTRIBUTION- For purposes of this subsection , the term `disqualified distribution' means any distribution to which this sect ion (or so much of section 356 as relates to this section) applies if, immediate ly after the distribution--

`(A) any person holds disqualified stock in the distributin g corporation which constitutes a 50-percent or greater interest in such corpora tion, or

`(B) any person holds disqualified stock in the controlled corporation (or, if stock of more than 1 controlled corporation is distributed, in any controlled corporation) which constitutes a 50-percent or greater interes t in such corporation.

`(3) DISQUALIFIED STOCK- For purposes of this subsection, the t erm `disqualified stock' means--

`(A) any stock in the distributing corporation acquired by purchase after October 9, 1990, and during the 5-year period ending on the date of the distribution, and

`(B) any stock in any controlled corporation--

`(i) acquired by purchase after October 9, 1990, and du ring the 5-year period ending on the date of the distribution, or

`(ii) received in the distribution to the extent attrib utable to distributions on stock described in subparagraph (A).

`(4) 50-PERCENT OR GREATER INTEREST- For purposes of this subse ction, the term `50-percent or greater interest' means stock possessing at least 50 percent of the total combined voting power of all classes of stock entitled to vote or at least 50 percent of the total value of shares of all classes of st ock.

`(5) AGGREGATION RULES-

`(A) IN GENERAL- For purposes of this subsection, a person and all persons related to such person (within the meaning of 267(b) or 707(b)(1 )) shall be treated as one person. For purposes of the preceding sentence, secti ons 267(b) and 707(b)(1) shall be applied by substituting `10 percent' for `50 p ercent' each place it appears.

`(B) PERSONS ACTING PURSUANT TO PLANS OR ARRANGEMENTS- If t wo or more persons act pursuant to a plan or arrangement with respect to acquisi tions of stock in the distributing corporation or controlled corporation, such p ersons shall be treated as one person for purposes of this subsection.

`(6) PURCHASE- For purposes of this subsection--

`(A) IN GENERAL- Except as otherwise provided in this parag raph, the term `purchase' means any acquisition but only if--

`(i) the basis of the property acquired in the hands of the acquirer is not determined (I) in whole or in part by reference to the adju sted basis of such property in the hands of the person from whom acquired, or (I I) under section 1014(a),

`(ii) except as provided in regulations, the property i s not acquired in an exchange to which section 351, 354, 355, or 356 applies, an d

`(iii) the property is not acquired in any other transa ction described in regulations.

`(B) CERTAIN 351 EXCHANGES TREATED AS PURCHASES- The term ` purchase' includes any acquisition of stock in an exchange to which section 351 applies to the extent such stock is acquired in exchange for--

`(i) any cash or cash item,

`(ii) any marketable security, or

`(iii) any debt of the transferor.
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`(C) CARRYOVER BASIS TRANSACTIONS- If--

`(i) any person acquires stock from another person who acquired such stock by purchase (as determined under this paragraph with regard to this subparagraph), and

`(ii) the adjusted basis of such stock in the hands of such acquirer is determined in whole or in part by reference to the adjusted bas is of such stock in the hands of such other person,

such acquirer shall be treated as having acquired such stock by purchase on the date it was so acquired by such other person.
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`(7) SPECIAL RULE WHERE SUBSTANTIAL DIMINUTION OF RISK-

`(A) IN GENERAL- If this paragraph applies to any stock for any period, the running of the 5-year period set forth in subparagraph (A) or ( B)(i) of paragraph (3) (whichever applies) shall be suspended during such period .

`(B) STOCK TO WHICH SUSPENSION APPLIES- This paragraph appl ies to any stock for any period during which the holder's risk of loss with resp ect to such stock is (directly or indirectly) substantially diminished by--

`(i) an option,

`(ii) a short sale,

`(iii) any special class of stock,
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`(iv) any device limiting risk from any portion of the activities of the corporation, or

`(v) any other device or transaction.

`(8) ATTRIBUTION FROM ENTITIES-

`(A) IN GENERAL- Paragraph (2) of section 318(a) shall appl y in determining whether a person holds stock in any corporation (determined by substituting `10 percent' for `50 percent' in subparagraph (C) of such paragraph (2)).

`(B) DEEMED PURCHASE RULE- If--

`(i) any person acquires by purchase an interest in any entity, and

`(ii) such person is treated under subparagraph (A) as holding any stock by reason of holding such interest,

such stock shall be treated as acquired by purchase by such p erson on the date of the purchase of the interest in such entity.

`(9) REGULATIONS- The Secretary shall prescribe such regulation s as may be necessary to carry out the purposes of this subsection, including re gulations to prevent the avoidance of the purposes of this subsection through th e use of related persons, pass-thru entities, options, or other arrangements.'

(b) TECHNICAL AMENDMENTS- Subsection (c) of section 361 is amended by adding at the end thereof the following new paragraph:

`(5) CROSS REFERENCE-

`For provision providing for recognition of gain in certain distribution s, see section 355(d)'.
(c) EFFECTIVE DATE-

(1) IN GENERAL- The amendments made by this section shall apply to distributions after October 9, 1990.

(2) TRANSITIONAL RULES- For purposes of subparagraphs (A) and ( B)(i) of section 355(d)(3) of the Internal Revenue Code of 1986 (as amended by s ubsection (a)), an acquisition shall be treated as occurring on or before Octobe r 9, 1990 if--

(A) such acquisition is pursuant to a written binding contr act in effect on October 9, 1990, and at all times thereafter before such acquis ition,

(B) such acquisition is pursuant to a tender or exchange of fer filed with the Securities and Exchange Commission on or before October 9, 19 90, or

(C) such acquisition is pursuant to an offer--

(i) the material terms of which were described in a wri tten public announcement on or before October 9, 1990,

(ii) which was the subject of a prior filing with the S ecurities and Exchange Commission, and

(iii) which is subsequently filed with the Securities a nd Exchange Commission before January 1, 1991.

SEC. 7442. MODIFICATIONS TO REGULATIONS ISSUED UNDER SECTION 305(c).

(a) GENERAL RULE- Subsection (c) of section 305 (relating to certai n transactions treated as distributions) is amended by adding at the end thereof the following new sentence: `Regulations prescribed under the preceding sentenc e shall provide that--

`(1) where the issuer of stock is required to redeem the stock at a specified time or the holder of stock has the option to require the issuer to redeem the stock, a redemption premium resulting from such requirement or opt ion shall be treated as reasonable only if the amount of such premium does not e xceed the amount determined under the principles of section 1273(a)(3),

`(2) a redemption premium shall not fail to be treated as a dis tribution (or series of distributions) merely because the stock is callable, and

`(3) in any case in which a redemption premium is treated as a distribution (or series of distributions), such premium shall be taken into acco unt under principles similar to the principles of section 1272(a).'

(b) EFFECTIVE DATE-

(1) IN GENERAL- Except as provided in paragraph (2), the amendm ent made by subsection (a) shall apply to stock issued after October 9, 1990.

(2) EXCEPTION- The amendment made by subsection (a) shall not a pply to any stock issued after October 9, 1990, if--

(A) such stock is issued pursuant to a written binding cont ract in effect on October 9, 1990, and at all times thereafter before such issua nce, or

(B) such stock is issued pursuant to a registration or offe ring statement filed on or before October 9, 1990, with a Federal or State agenc y regulating the offering or sale of securities and such stock is issued before the date 90 days after the date of such filing.

SEC. 7443. MODIFICATIONS TO SECTION 1060.

(a) EFFECT OF ALLOCATION AGREEMENTS- Subsection (a) of section 1060 (relating to special allocation rules for certain asset allocations) is amended by adding at the end thereof the following new sentence: `If in connection with an applicable asset acquisition, the transferee and transferor agree in writing as to the allocation of any consideration, or as to the fair market value of an y of the assets, such agreement shall be binding on both the transferee and tran sferor unless the Secretary determines that such allocation (or fair market valu e) is not appropriate.'

(b) INFORMATION REQUIRED IN CASE OF CERTAIN TRANSFERS OF INTEREST I N ENTITIES-

(1) IN GENERAL- Section 1060 is amended by redesignating subsec tion (e) as subsection (f) and by inserting after subsection (d) the following n ew subsection:

`(e) INFORMATION REQUIRED IN CASE OF CERTAIN TRANSFERS OF INTERESTS IN ENTITIES-

`(1) IN GENERAL- If--

`(A) a person who is a 10-percent owner with respect to any entity transfers an interest in such entity, and

`(B) in connection with such transfer, such owner (or a rel ated person) enters into an employment contract, covenant not to compete, royalt y or lease agreement, or other agreement with the transferee,

such owner and the transferee shall, at such time and in such man ner as the Secretary may prescribe, furnish such information as the Secretary ma y require.

`(2) 10-PERCENT OWNER- For purposes of this subsection--

`(A) IN GENERAL- The term `10-percent owner' means, with re spect to any entity, any person who holds 10 percent or more (by value) of the i nterests in such entity immediately before the transfer.

`(B) CONSTRUCTIVE OWNERSHIP- Section 318 shall apply in det ermining ownership of stock in a corporation. Similar principles shall apply in determining the ownership of interests in any other entity.

`(3) RELATED PERSON- For purposes of this subsection, the term `related person' means any person who is related (within the meaning of section 267(b) or 707(b)(1)) to the 10-percent owner.'

(2) TECHNICAL AMENDMENT- Clause (x) of section 6724(d)(1)(B) is amended by striking `section 1060(b)', and inserting `subsection (b) or (e) of section 1060'.

(c) INFORMATION REQUIRED IN SECTION 338(h)(10) TRANSACTIONS- Paragr aph (10) of section 338 is amended by adding at the end thereof the following ne w subparagraph:

`(C) INFORMATION REQUIRED TO BE FURNISHED TO THE SECRETARY- Under regulations, where an election is made under subparagraph (A), the purcha sing corporation and the common parent of the selling consolidated group shall, at such times and in such manner as may be provided in regulations, furnish to t he Secretary the following information:

`(i) The amount allocated under subsection (b)(5) to go odwill or going concern value.

`(ii) Any modification of the amount described in claus e (i).

`(iii) Any other information as the Secretary deems nec essary to carry out the provisions of this paragraph.'

(d) EFFECTIVE DATE-

(1) IN GENERAL- Except as provided in paragraph (2), the amendm ents made by this section shall apply to acquisitions after October 9, 1990.

(2) BINDING CONTRACT EXCEPTION- The amendments made by this sec tion shall not apply to any acquisition pursuant to a written binding contract i n effect on October 9, 1990, and at all times thereafter before such acquisition .

SEC. 7444. MODIFICATION TO CORPORATION EQUITY REDUCTION LIMITATIONS O N NET OPERATING LOSS CARRYBACKS.

(a) REPEAL OF EXCEPTION FOR ACQUISITIONS OF SUBSIDIARIES- Clause (i i) of section 172(m)(3)(B) (relating to exceptions) is amended to read as follow s:

`(ii) EXCEPTION- The term `major stock acquisition' doe s not include a qualified stock purchase (within the meaning of section 338) to which an election under section 338 applies.'

(b) EFFECTIVE DATE-

(1) IN GENERAL- Except as provided in paragraph (2), the amendm ent made by subsection (a) shall apply to acquisitions after October 9, 1990.

(2) BINDING CONTRACT EXCEPTION- The amendment made by subsectio n (a) shall not apply to any acquisition pursuant to a written binding contract in effect on October 9, 1990, and at all times thereafter before such acquisitio n.

SEC. 7445. ISSUANCE OF DEBT OR STOCK IN SATISFACTION OF INDEBTEDNESS.

(a) ISSUANCE OF DEBT INSTRUMENT-

(1) Subsection (e) of section 108 (relating to general rules fo r discharge of indebtedness) is amended by adding at the end thereof the followi ng new paragraph:

`(11) INDEBTEDNESS SATISFIED BY ISSUANCE OF DEBT INSTRUMENT-

(A) IN GENERAL- For purposes of determining income of a deb tor from discharge of indebtedness, if a debtor issues a debt instrument in sati sfaction of indebtedness, such debtor shall be treated as having satisfied the i ndebtedness with an amount of money equal to the issue price of such debt instru ment.

(B) ISSUE PRICE- For purposes of subparagraph (A), the issu e price of any debt instrument shall be determined under sections 1273 and 1274. For purposes of the preceding sentence, section 1273(b)(4) shall be applied by reducing the stated redemption price of any instrument by the portion of such st ated redemption price which is treated as interest for purposes of this chapter. '

(2) Subsection (a) of section 1275 is amended by striking parag raph (4) and redesignating paragraph (5) as paragraph (4).

(b) LIMITATION ON STOCK FOR DEBT EXCEPTION-

(1) IN GENERAL- Subparagraph (B) of section 108(e)(10) is amend ed to read as follows:

`(B) EXCEPTION FOR CERTAIN STOCK IN TITLE 11 CASES AND INSO LVENT DEBTORS-

`(i) IN GENERAL- Subparagraph (A) shall not apply to an y transfer of stock of the debtor (other than disqualified stock)--

`(I) by a debtor in a title 11 case, or

`(II) by any other debtor but only to the extent su ch debtor is insolvent.

`(ii) DISQUALIFIED STOCK- For purposes of clause (i), t he term `disqualified stock' means any stock with a stated redemption price if--

`(I) such stock has a fixed redemption date,

`(II) the issuer of such stock has the right to red eem such stock at one or more times, or

`(III) the holder of such stock has the right to re quire its redemption at one or more times.'

(2) CONFORMING AMENDMENT- Paragraph (8) of section 108(e) is am ended by adding at the end thereof the following new sentence:

`Any stock which is disqualified stock (as defined in paragraph ( 10)(B)(ii)) shall not be treated as stock for purposes of this paragraph.'< /ul>

(c) EFFECTIVE DATE-

(1) IN GENERAL- Except as provided in paragraph (2), the amendm ents made by this section shall apply to debt instruments issued, and stock tran sferred, after October 9, 1990, in satisfaction of any indebtedness.

(2) EXCEPTIONS- The amendments made by this section shall not a pply to any debt instrument issued, or stock transferred, in satisfaction of any indebtedness if such issuance or transfer (as the case may be)--

(A) is in a title 11 or similar case (as defined in section 368(a)(3)(A) of the Internal Revenue Code of 1986) which was filed on or before October 9, 1990,

(B) is pursuant to a written binding contract in effect on October 9, 1990, and at all times thereafter before such issuance or transfer,

(C) is pursuant to a tender or exchange offer filed with th e Securities and Exchange Commission on or before October 9, 1990, or
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(D) is pursuant to a transaction--

(i) the material terms of which were described in a wri tten public announcement on or before October 9, 1990,

(ii) which was the subject of a prior filing with the S ecurities and Exchange Commission, and

(iii) which is subsequently filed with the Securities a nd Exchange Commission before January 1, 1991.

PART VI--EMPLOYMENT TAX PROVISIONS

SEC. 7451. INCREASE IN DOLLAR LIMITATION ON AMOUNT OF WAGES SUBJECT T O HOSPITAL INSURANCE TAX.

(a) HOSPITAL INSURANCE TAX-

(1) IN GENERAL- Paragraph (1) of section 3121(a) is amended--

(A) by striking `contribution and benefit base (as determin ed under section 230 of the Social Security Act)' each place it appears and inse rting `applicable contribution base (as determined under subsection (x))', and

(B) by striking `such contribution and benefit base' and in serting `such applicable contribution base'.

(2) APPLICABLE CONTRIBUTION BASE- Section 3121 is amended by ad ding at the end thereof the following new subsection:

`(x) APPLICABLE CONTRIBUTION BASE- For purposes of this chapter--

`(1) OLD-AGE, SURVIVORS, AND DISABILITY INSURANCE- For purposes of the taxes imposed by sections 3101(a) and 3111(a), the applicable contributi on base for any calendar year is the contribution and benefit base determined un der section 230 of the Social Security Act for such calendar year.

`(2) HOSPITAL INSURANCE- For purposes of the taxes imposed by s ection 3101(b) and 3111(b), the applicable contribution base is--

`(A) $89,000 for calendar year 1991, and

`(B) for any calendar year after 1991, the applicable contr ibution base for the preceding year adjusted in the same manner as is used in ad justing the contribution and benefit base under section 230(b) of the Social Sec urity Act.'

(b) SELF-EMPLOYMENT TAX-

(1) IN GENERAL- Subsection (b) of section 1402 is amended by st riking `the contribution and benefit base (as determined under section 230 of th e Social Security Act)' and inserting `the applicable contribution base (as dete rmined under subsection (k))'.

(2) APPLICABLE CONTRIBUTION BASE- Section 1402 is amended by ad ding at the end thereof the following new subsection:

`(k) APPLICABLE CONTRIBUTION BASE- For purposes of this chapter--

`(1) OLD-AGE, SURVIVORS, AND DISABILITY INSURANCE- For purposes of the tax imposed by section 1401(a), the applicable contribution base for any calendar year is the contribution and benefit base determined under section 230 of the Social Security Act for such calendar year.

`(2) HOSPITAL INSURANCE- For purposes of the tax imposed by sec tion 1401(b), the applicable contribution base for any calendar year is the appl icable contribution base determined under section 3121(x)(2) for such calendar y ear.'

(c) RAILROAD RETIREMENT TAX- Clause (i) of section 3231(e)(2)(B) is amended to read as follows:

`(i) TIER 1 TAXES-

`(I) IN GENERAL- Except as provided in subclause (I I) of this clause and in clause (ii), the term `applicable base' means for any c alendar year the contribution and benefit base determined under section 230 of t he Social Security Act for such calendar year.

`(II) HOSPITAL INSURANCE TAXES- For purposes of app lying so much of the rate applicable under section 3201(a) or 3221(a) (as the ca se may be) as does not exceed the rate of tax in effect under section 3101(b), a nd for purposes of applying so much of the rate of tax applicable under section 3211(a)(1) as does not exceed the rate of tax in effect under section 1401(b), t he term `applicable base' means for any calendar year the applicable contributio n base determined under section 3121(x)(2) for such calendar year.'

(d) TECHNICAL AMENDMENT-

(1) Paragraph (3) of section 6413(c) is amended to read as foll ows:

`(3) SEPARATE APPLICATION FOR HOSPITAL INSURANCE TAXES- In appl ying this subsection with respect to--

`(A) the tax imposed by section 3101(b) (or any amount equi valent to such tax), and

`(B) so much of the tax imposed by section 3201 as is deter mined at a rate not greater than the rate in effect under section 3101(b),< /ul>

the applicable contribution base determined under section 3121(x) (2) for any calendar year shall be substituted for `contribution and benefit bas e (as determined under section 230 of the Social Security Act)' each place it ap pears.'

(2) Sections 3122 and 3125 are each amended by striking `contri bution and benefit base limitation' each place it appears and inserting `applica ble contribution base limitation'.

(e) EFFECTIVE DATE- The amendments made by this section shall apply to 1991 and later calendar years.

SEC. 7452. EXTENDING MEDICARE COVERAGE OF, AND APPLICATION OF HOSPITA L INSURANCE TAX TO, ALL STATE AND LOCAL GOVERNMENT EMPLOYEES.

(a) IN GENERAL-

(1) APPLICATION OF HOSPITAL INSURANCE TAX- Section 3121(u)(2) o f the Internal Revenue Code of 1986 is amended by striking subparagraphs (C) and (D).

(2) COVERAGE UNDER MEDICARE- Section 210(p) of the Social Secur ity Act (42 U.S.C. 410(p)) is amended by striking paragraphs (3) and (4).

(3) EFFECTIVE DATE- The amendments made by this subsection shal l apply to services performed after December 31, 1991.

(b) TRANSITION IN TAX RATES- In applying sections 3101(b) and 3111( b) of the Internal Revenue Code to service which, but for the amendment made by subsection (a), would not constitute employment for purposes of such sections an d which is performed--

(1) after December 31, 1991, and before January 1, 1993, the pe rcentage of wages rate of tax under such sections shall be 0.8 percent (instead of 1.45 percent), and

(2) after December 31, 1992, and before January 1, 1994, the pe rcentage of wages rate of tax under such sections shall be 1.35 percent (instead of 1.45 percent).

(c) TRANSITION IN BENEFITS FOR STATE AND LOCAL GOVERNMENT EMPLOYEES AND FORMER EMPLOYEES-

(1) IN GENERAL-

(A) EMPLOYEES NEWLY SUBJECT TO TAX- For purposes of section s 226, 226A, and 1811 of the Social Security Act, in the case of any individual who performs services during the calendar quarter beginning January 1, 1992, the wages for which are subject to the tax imposed by section 3101(b) of the Intern al Revenue Code of 1986 only because of the amendment made by subsection (a),

the individual's medicare qualified State or local government employment (as defined in subparagraph (B)) performed before January 1, 1992, s hall be considered to be `employment' (as defined for purposes of title II of su ch Act), but only for purposes of providing the individual (or another person) w ith entitlement to hospital insurance benefits under part A of title XVIII of su ch Act for months beginning with January 1992.

(B) MEDICARE QUALIFIED STATE OR LOCAL GOVERNMENT EMPLOYMENT DEFINED- In this paragraph, the term `medicare qualified State or local governm ent employment' means medicare qualified government employment described in sect ion 210(p)(1)(B) of the Social Security Act (determined without regard to sectio n 210(p)(3) of such Act).

(2) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated to the Federal Hospital Insurance Trust Fund from time to time suc h sums as the Secretary of Health and Human Services deems necessary for any fis cal year on account of--

(A) payments made or to be made during such fiscal year fro m such Trust Fund with respect to individuals who are entitled to benefits under title XVIII of the Social Security Act solely by reason of paragraph (1),< /ul>

(B) the additional administrative expenses resulting or exp ected to result therefrom, and

(C) any loss in interest to such Trust Fund resulting from the payment of those amounts,

in order to place such Trust Fund in the same position at the end of such fiscal year as it would have been in if this subsection had not been en acted.

(3) INFORMATION TO INDIVIDUALS WHO ARE PROSPECTIVE MEDICARE BEN EFICIARIES BASED ON STATE AND LOCAL GOVERNMENT EMPLOYMENT- Section 226(g) of the Social Security Act (42 U.S.C. 426(g)) is amended--

(A) by redesignating clauses (1) through (3) as clauses (A) through (C), respectively,

(B) by inserting `(1)' after `(g)', and

(C) by adding at the end the following new paragraph:< /ul>

`(2) The Secretary, in consultation with State and local government s, shall provide procedures designed to assure that individuals who perform medi care qualified government employment by virtue of service described in section 2 10(a)(7) are fully informed with respect to (A) their eligibility or potential e ligibility for hospital insurance benefits (based on such employment) under part A of title XVIII, (B) the requirements for and conditions of such eligibility, and (C) the necessity of timely application as a condition of becoming entitled under subsection (b)(2)(C), giving particular attention to individuals who apply for an annuity or retirement benefit and whose eligibility for such annuity or retirement benefit is based on a disability.'.

SEC. 7453. COVERAGE OF CERTAIN STATE AND LOCAL EMPLOYEES UNDER SOCIAL SECURITY.

(a) EMPLOYMENT UNDER OASDI- Paragraph (7) of section 210(a) of the Social Security Act (42 U.S.C. 410(a)(7)) is amended--

(1) by striking `or' at the end of subparagraph (D);
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(2) by striking the semicolon at the end of subparagraph (E) an d inserting `, or'; and

(3) by adding at the end the following new subparagraph:

`(F) service in the employ of a State (other than the Distr ict of Columbia, Guam, or American Samoa), of any political subdivision thereof, or of any instrumentality of any one or more of the foregoing which is wholly o wned thereby, by an individual who is not a member of a retirement system (as de fined in section 218(b)(4)) of such State, political subdivision, or instrumenta lity, except that the provisions of this subparagraph shall not be applicable to service performed--

`(i) by an individual who is employed to relieve such i ndividual from unemployment;

`(ii) in a hospital, home, or other institution by a pa tient or inmate thereof;

`(iii) by any individual as an employee serving on a te mporary basis in case of fire, storm, snow, earthquake, flood, or other similar emergency;

`(iv) by an election official or election worker if the remuneration paid in a calendar year for such service is less than $100; or

`(v) by an employee in a position compensated solely on a fee basis which is treated pursuant to section 211(c)(2)(E) as a trade or bus iness for purposes of inclusion of such fees in net earnings from self employmen t;'.

(b) EMPLOYMENT UNDER FICA- Paragraph (7) of section 3121(b) of the Internal Revenue Code of 1986 is amended--

(1) by striking `or' at the end of subparagraph (D);
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(2) by striking the semicolon at the end of subparagraph (E) an d inserting `, or'; and

(3) by adding at the end the following new subparagraph:

`(F) service in the employ of a State (other than the Distr ict of Columbia, Guam, or American Samoa), of any political subdivision thereof, or of any instrumentality of any one or more of the foregoing which is wholly o wned thereby, by an individual who is not a member of a retirement system (as de fined in section 218(b)(4)) of the Social Security Act) of such State, political subdivision, or instrumentality, except that the provisions of this subparagrap h shall not be applicable to service performed--

`(i) by an individual who is employed to relieve such i ndividual from unemployment;

`(ii) in a hospital, home, or other institution by a pa tient or inmate thereof;

`(iii) by any individual as an employee serving on a te mporary basis in case of fire, storm, snow, earthquake, flood, or other similar emergency;

`(iv) by an election official or election worker if the remuneration paid in a calendar year for such service is less than $100; or

`(v) by an employee in a position compensated solely on a fee basis which is treated pursuant to section 1402(c)(2)(E) as a trade or bu siness for purposes of inclusion of such fees in net earnings from self-employme nt;'.

(c) MANDATORY EXCLUSION OF CERTAIN EMPLOYEES FROM STATE AGREEMENTS- Section 218(c)(6) of the Social Security Act (42 U.S.C. 418(c)(6)) is amended--

(1) by striking `and' at the end of subparagraph (D);

(2) by striking the period at the end of subparagraph (E) and i nserting in lieu thereof `, and'; and

(3) by adding at the end the following new subparagraph:

`(F) service described in section 210(a)(7)(F) which is inc luded as `employment' under section 210(a).'.

(d) EFFECTIVE DATE- The amendments made by this section shall apply with respect to service performed after December 31, 1991.

SEC. 7454. EXTENSION OF FUTA SURTAX.

(a) IN GENERAL- Section 3301 (relating to rate of FUTA tax) is amen ded--

(1) by striking `1988, 1989, and 1990' in paragraph (1) and ins erting `1988 through 1995', and

(2) by striking `1991' in paragraph (2) and inserting `1996'.

(b) EFFECTIVE DATE- The amendments made by this section shall apply to wages paid after December 31, 1990.

SEC. 7455. INCREASE IN TIER 2 RAILROAD RETIREMENT TAXES.

(a) TAX ON EMPLOYEES- Subsection (b) of section 3201 of the Interna l Revenue Code of 1986 (relating to rate of tax) is amended by striking `4.90 pe rcent' and inserting `5 percent'.

(b) TAX ON EMPLOYEE REPRESENTATIVES- Paragraph (2) of section 3211( a) of such Code (relating to rate of tax) is amended to read as follows:
`(2) TIER 2 TAX- In addition to other taxes, there is hereby im posed on the income of each employee representative a tax equal to 15.05 percent of the compensation received during any calendar year by such employee represen tative for services rendered by such employee representative.'

(c) TAX ON EMPLOYERS- Subsection (b) of section 3221 of such Code ( relating to rate of tax) is amended by striking `16.10 percent' and inserting `1 6.4 percent'.

(d) EFFECTIVE DATES-

(1) IN GENERAL- Except as provided in paragraph (2), the amendm ents made by this section shall apply to compensation received after December 31 , 1990.

(2) EMPLOYER TAX- The amendment made by subsection (c) shall ap ply to compensation paid after December 31, 1990.

SEC. 7456. TRANSFER TO RAILROAD RETIREMENT ACCOUNT.

(a) IN GENERAL- Subsection (c)(1)(A) of section 224 of the Railroad Retirement Solvency Act of 1983 (relating to section 72(r) of the Internal Reve nue Code of 1986, revenue increase transferred to certain railroad accounts) is amended by striking `1990' and inserting `1991'.

(b) EFFECTIVE DATE- The amendment made by this section shall take e ffect on September 30, 1990.

SEC. 7457. TIER 1 RAILROAD RETIREMENT TAX RATES EXPLICITLY DETERMINED BY REFERENCE TO SOCIAL SECURITY TAXES.

(a) TAX ON EMPLOYEES- Subsection (a) of section 3201 of the Interna l Revenue Code of 1986 (relating to rate of tax) is amended--

(1) by striking `following' and inserting `applicable', and

(2) by striking `employee:' and all that follows and inserting `employee. For purposes of the preceding sentence, the term `applicable percenta ge' means the percentage equal to the sum of the rates of tax in effect under su bsections (a) and (b) of section 3101 for the calendar year.'

(b) TAX ON EMPLOYEE REPRESENTATIVES- Paragraph (1) of section 3211( a) of such Code (relating to rate of tax) is amended--

(1) by striking `following' and inserting `applicable', and

(2) by striking `representative:' and all that follows and inse rting `representative. For purposes of the preceding sentence, the term `applica ble percentage' means the percentage equal to the sum of the rates of tax in eff ect under subsections (a) and (b) of section 3101 and subsections (a) and (b) of section 3111 for the calendar year.'

(c) TAX ON EMPLOYERS- Subsection (a) of section 3221 of such Code ( relating to rate of tax) is amended--

(1) by striking `following' and inserting `applicable', and

(2) by striking `employer:' and all that follows and inserting `employer. For purposes of the preceding sentence, the term `applicable percenta ge' means the percentage equal to the sum of the rates of tax in effect under su bsections (a) and (b) of section 3111 for the calendar year.'

SEC. 7458. DEPOSITS OF PAYROLL TAXES.

(a) IN GENERAL--Subsection (g) of section 6302 is amended to read a s follows:

`(g) DEPOSITS OF SOCIAL SECURITY TAXES AND WITHHELD INCOME TAXES- I f, under regulations prescribed by the Secretary, a person is required to make d eposits of taxes imposed by chapters 21 and 24 on the basis of eighth-month peri ods, such person shall make deposits of such taxes on the 1st banking day after any day on which such person has $100,000 or more of such taxes for deposit.'

(b) TECHNICAL AMENDMENT- Paragraph (2) of section 7632(b) of the Re venue Reconciliation Act of 1989 is hereby repealed.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to amounts required to be deposited after December 31, 1990.

PART VII--MISCELLANEOUS PROVISIONS

SEC. 7461. OVERALL LIMITATION ON ITEMIZED DEDUCTIONS.

(a) IN GENERAL- Part I of subchapter B of chapter 1 is amended by a dding at the end thereof the following new section:

`SEC. 68. OVERALL LIMITATION ON ITEMIZED DEDUCTIONS.

`(a) GENERAL RULE- In the case of an individual whose adjusted gros s income exceeds the applicable amount, the amount of the itemized deductions ot herwise allowable for the taxable year shall be reduced by the lesser of--< /ul>
`(1) 5 percent of the excess of adjusted gross income over the applicable amount, or

`(2) 80 percent of the amount of the itemized deductions otherw ise allowable for such taxable year.

`(b) APPLICABLE AMOUNT- For purposes of this section, the term `app licable amount' means $100,000 ($50,000 in the case of a separate return by a ma rried individual within the meaning of section 7703).

`(c) EXCEPTION FOR CERTAIN ITEMIZED DEDUCTIONS- For purposes of thi s section, the term `itemized deductions' does not include--

`(1) the deduction under section 213 (relating to medical, etc. expenses),

`(2) any deduction for investment interest (as defined in secti on 163(d)), and

`(3) the deduction under section 165(a) for losses described in section 165(c)(3).

`(d) COORDINATION WITH OTHER LIMITATIONS- This section shall be app lied after the application of any other limitation on the allowance of any itemi zed deduction.

`(e) EXCEPTION FOR ESTATES AND TRUSTS- This section shall not apply to any estate or trust.'

(b) COORDINATION WITH MINIMUM TAX- Paragraph (1) of section 56(b) i s amended by adding at the end thereof the following new subparagraph:

`(F) SECTION 68 NOT APPLICABLE- Section 68 shall not apply. '

(c) MINIMUM TAX TREATMENT OF CERTAIN CHARITABLE CONTRIBUTIONS OF AP PRECIATED PROPERTY- Section 57(a)(6)(A) is amended by inserting `(other than tan gible personal property)' after `capital gain property'.

(d) CLERICAL AMENDMENT- The table of sections for part I of subchap ter B of chapter 1 of such Code is amended by adding at the end thereof the foll owing new item:

`Sec. 68. Overall limitation on itemized deductions.'
(e) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 1990.

SEC. 7462. DISALLOWANCE OF DEDUCTION FOR INTEREST ON UNPAID CORPORATE TAXES.

(a) GENERAL RULE- Section 163 (relating to interest) is amended by redesignating subsection (k) as subsection (l) and by inserting after subsection (j) the following new subsection:

`(k) Disallowance of Deduction for Interest on Unpaid Corporate Tax es-

`(1) IN GENERAL- In the case of a corporation, no deduction sha ll be allowed under this subtitle for any interest--

`(A) paid or accrued under subtitle F on any underpayment o f tax imposed by this title or on any other liability arising under this title, and

`(B) attributable to periods after the 30th day following t he earlier of--

`(i) the date on which the 1st letter of proposed defic iency which allows the taxpayer an opportunity for administrative review in the Internal Revenue Service Office of Appeals is sent, or

`(ii) the date on which the deficiency notice under sec tion 6212 is sent.

`(2) NOTICE FOR TAXES OTHER THAN INCOME TAXES- In the case of a ny underpayment of tax imposed by this title other than under chapter 1, or any other liability imposed by this title not relating to chapter 1, paragraph (1)(B ) shall be applied by reference to any letter or notice provided by the Secretar y which is similar to the letter or notice described in paragraph (1)(B).'< /ul>

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall appl y to interest attributable to periods after December 31, 1990.

SEC. 7463. DENIAL OF DEDUCTION FOR UNNECESSARY COSMETIC SURGERY.

(a) IN GENERAL- Section 213(b) (relating to limitation with respect to medicine and drugs) is amended to read as follows:

`(b) Limitations-

`(1) MEDICINE AND DRUGS- An amount paid during the taxable year for medicine or a drug shall be taken into account under subsection (a) only if such medicine or drug is a prescribed drug or is insulin.

`(2) COSMETIC SURGERY-

`(A) IN GENERAL- An amount paid during the taxable year for cosmetic surgery or other similar procedures shall not be taken into account un der subsection (a), unless the surgery or procedure is necessary to ameliorate a deformity arising from, or directly related to, a congenital abnormality, a per sonal injury resulting from an accident or trauma, or disfiguring disease.< /ul>

`(B) DEFINITION- For purposes of this paragraph, the term ` cosmetic surgery' means any procedure which is directed at improving the patient 's appearance and does not meaningfully promote the proper function of the body or prevent or treat illness or disease.'

(b) EFFECTIVE DATE- The amendment made by this section shall apply to taxable years beginning after December 31, 1990.

Subtitle E--Other Provisions

SEC. 7471. TAX-RELATED USER FEES MADE PERMANENT.

(a) IN GENERAL- Section 10511(c) of the Omnibus Budget Reconciliati on Act of 1987 is amended by striking `and before September 30, 1990'.

(b) EFFECTIVE DATE- The amendment made by this section shall take e ffect on September 29, 1990, except that no advance payment shall be required fo r any fee for any requests filed after September 29, 1990, and before the 30th d ay after the date of the enactment of this Act.

SEC. 7472. PUBLIC DEBT LIMIT EXTENSION.

The public debt limit as set forth in subsection (b) of section 310 1 of title 31, United States Code, shall be increased by so much of an amount no t exceeding $321,000,000,006, as is necessary.

SEC. 7473. REPORTS OF REFUNDS AND CREDITS.

(a) IN GENERAL- Section 6405 (relating to reports of refunds and cr edits) is amended--

(1) by striking `$200,000' in subsection (a) and inserting `$1, 000,000'; and

(2) by striking `$200,000' in subsection (b) and inserting `$1, 000,000'.

(b) EFFECTIVE DATE- The amendments made by this section shall take effect on the date of the enactment of this Act, except that such amendments sha ll not apply with respect to any refund or credit with respect to which a report has been made before the date of the enactment of this Act.

TITLE VIII--CIVIL SERVICE AND POSTAL SERVICE PROGRAMS

SEC. 8001. ELIMINATION OF LUMP-SUM CREDIT FOR INDIVIDUALS ELECTING AL TERNATIVE FORMS OF ANNUITIES.

(a) ELIMINATION OF LUMP-SUM CREDIT- (1) Sections 8343a and 8420a of title 5, United States Code, are repealed.

(2)(A) The table of sections for chapter 83 of title 5, United Stat es Code, is amended by striking out the item relating to section 8343a.

(B) The table of sections for chapter 84 of title 5, United States Code, is amended by striking out the item relating to section 8420a.

(3) Section 8424(a) of title 5, United States Code, is amended by s triking out `Except as provided in section 8420a, payment' and inserting in lieu thereof `Payment'.

(4) Section 807(e) of the Foreign Service Act of 1980 (22 U.S.C. 40 47(e)) is repealed.

(5) Section 294 of the Central Intelligence Retirement Act of 1964 for Certain Employees (50 U.S.C. 403 note) is repealed.

(6) The provisions of this subsection shall be effective on and aft er November 2, 1990, and (except as provided under subsection (b)) shall apply t o any annuity payable to an employee or Member with a commencement date on or af ter November 2, 1990 in accordance with regulations prescribed by the Office of Personnel Management.

(b) LUMP-SUM CREDIT FOR ALTERNATIVE FORMS OF ANNUITIES ON OR BEFORE NOVEMBER 1, 1990- (1) Notwithstanding any other provision of law, the provision s of section 4005 of the Omnibus Budget Reconciliation Act of 1989 shall apply t o any lump-sum credit payable to an employee or Member pursuant to the election of an alternative form of annuity by such employee or Member under section 8343a or section 8420a of title 5, United States Code, if the annuity of such employe e or Member commences on or before November 1, 1990.

(2) Notwithstanding any other provision of law, the provisions repe aled under subsection (a) (4) and (5) shall apply to any lump-sum credit payable to an employee (to which such provisions would otherwise apply) if the annuity of such employee commences on or before November 1, 1990.

(c) DEFINITIONS- For purposes of this section, the terms `lump-sum credit', `employee', and `Member' each has the meaning given such term by sectio n 8331 or section 8401 of title 5, United States Code, as appropriate.

SEC. 8002. UNITED STATES POSTAL SERVICE CONTRIBUTIONS FOR CERTAIN EMP LOYEE AND ANNUITANT HEALTH BENEFITS.

Section 8906(g)(2) of title, 5, United States Code, is amended to r ead as follows:

`(2) The Government contributions authorized by this section fo r health benefits for an annuitant shall be paid by--

`(A) the United States Postal Service, in the case of annui tant whose eligibility for an annuity is based on a separation from service with the Postal Service on or after June 30, 1971, or who is a survivor of such an a nnuitant or a survivor of an employee who died while employed by the Postal Serv ice on or after June 30, 1971; or

`(B) the government of the District of Columbia, in the cas e of an annuitant whose eligibility for an annuity is based on a separation from service with such government, or who is a survivor of such an annuitant or a su rvivor of an employee who died while employed by such government.'

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall take effect on October 1, 1990, and shall apply with respect to amounts payable for periods beginning on or after that date.

SEC. 8003. PROHIBITION OF CERTAIN TAXATION ON PAYMENTS FROM THE EMPLO YEES' HEALTH BENEFITS FUND.

Section 8909 of title 5, United States Code, is amended by adding a t the end thereof the following new subsection:

`(f)(1) No tax, fee, or other monetary payment may be imposed direc tly or indirectly on a carrier or an underwriting or plan administration subcont ractor of an approved health benefit plan by any State, the District of Columbia , or the Commonwealth of Puerto Rico, or by any political subdivision or other g overnmental authority thereof, with respect to payments made from the Fund.

`(2) Paragraph (1) of this subsection shall not be construed to exe mpt any carrier or underwriting or plan administration subcontractor of an appro ved health benefits plan from the imposition, payment, or collection of a tax, f ee, or other monetary payment on the net income or profit accruing to or realize d by such carrier or underwriting or plan administration subcontractor from busi ness conducted under this chapter, if that tax, fee, or payment is applicable to a broad range of business activity.'.

SEC. 8004. COMPUTER MATCHING OF FEDERAL BENEFITS INFORMATION AND PRIV ACY PROTECTION.

(a) SHORT TITLE- This section may be cited as the `Computer Matchin g and Privacy Protection Amendments of 1990'.

(b) VERIFICATION REQUIREMENTS AMENDMENT- (1) Subsection (p) of sect ion 552a of title 5, United States Code, is amended to read as follows:

`(p) VERIFICATION AND OPPORTUNITY TO CONTEST FINDINGS- (1) In order to protect any individual whose records are used in a matching program, no reci pient agency, non-Federal agency, or source agency may suspend, terminate, reduc e, or make a final denial of any financial assistance or payment under a Federal benefit program to such individual, or take other adverse action against such i ndividual, as a result of information produced by such matching program, until--

`(A)(i) the agency has independently verified the information; or

`(ii) the Data Integrity Board of the agency, or in the case of a non-Federal agency the Data Integrity Board of the source agency, determines in accordance with guidance issued by the Director of the Office of Management a nd Budget that--

`(I) the information is limited to identification and amoun t of benefits paid by the source agency under a Federal benefit program; and

`(II) there is a high degree of confidence that the informa tion provided to the recipient agency is accurate;

`(B) the individual receives a notice from the agency containin g a statement of its findings and informing the individual of the opportunity to contest such findings; and

`(C)(i) the expiration of any time period established for the p rogram by statute or regulation for the individual to respond to that notice; or

`(ii) in the case of a program for which no such period is esta blished, the end of the 30-day period beginning on the date on which notice unde r subparagraph (B) is mailed or otherwise provided to the individual.
< /ul>
`(2) Independent verification referred to in paragraph (1) requires investigation and confirmation of specific information relating to an individua l that is used as a basis for an adverse action against the individual, includin g where applicable investigation and confirmation of--

`(A) the amount of any asset or income involved;

`(B) whether such individual actually has or had access to such asset or income for such individual's own use; and

`(C) the period or periods when the individual actually had suc h asset or income.

`(3) Notwithstanding paragraph (1), an agency may take any appropri ate action otherwise prohibited by such paragraph if the agency determines that the public health or public safety may be adversely affected or significantly th reatened during any notice period required by such paragraph.'.

(2) Not later than 90 days after the date of the enactment of this Act, the Director of the Office of Management and Budget shall publish guidance under subsection (p)(1)(A)(ii) of section 552a of title 5, United States Code, a s amended by this Act.

(c) LIMITATION ON APPLICATION OF VERIFICATION REQUIREMENT- Section 552a(p)(1)(A)(ii)(II) of title 5, United States Code, as amended by section 2, s hall not apply to a program referred to in paragraph (1), (2), or (4) of section 1137(b) of the Social Security Act (42 U.S.C. 1320b-7), until the earlier of--

(1) the date on which the Data Integrity Board of the Federal a gency which administers that program determines that there is not a high degree of confidence that information provided by that agency under Federal matching pr ograms is accurate; or

(2) 30 days after the date of publication of guidance under sec tion 2(b).

SEC. 8005. APPLICATION OF CERTAIN MEDICARE LIMITS TO FEDERAL EMPLOYEE HEALTH BENEFITS ENROLLEES AGE 65 OR OLDER.

(a) FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM- Section 8904 of titl e 5, United States Code, is amended by inserting `(a)' before the first sentence and by adding at the end of the section the following new subsection:

`(b)(1) A plan, other than a prepayment plan described in section 8 903(4) of this title, may not provide benefits, in the case of any retired enrol led individual who is age 65 or older and is not covered to receive medicare hos pital and insurance benefits under part A of title XVIII of the Social Security Act (42 U.S.C. 1395c et seq.), to pay a charge imposed by any health care provid er, for inpatient hospital services which are covered for purposes of benefit pa yments under this chapter and part A of title XVIII of the Social Security Act, to the extent that such charge exceeds applicable limitations on hospital charge s established for medicare purposes under section 1886 of the Social Security Ac t (42 U.S.C. 1395ww). Hospital providers who have in force participation agreeme nts with the Secretary of Health and Human Services consistent with sections 181 4(a) and 1866 of the Social Security Act (42 U.S.C. 1395f(a) and 1395cc), whereb y the participating provider accepts medicare benefits as full payment for cover ed items and services after applicable patient copayments under section 1813 of such Act (42 U.S.C. 1395e) have been satisfied, shall accept equivalent benefit payments and enrollee copayments under this chapter as full payment for services described in the preceding sentence. The Office of Personnel Management shall n otify the Secretary of Health and Human Services if a hospital is found to knowi ngly and willfully violate this subsection on a repeated basis and the Secretary may invoke appropriate sanctions in accordance with section 1866(b)(2) of the S ocial Security Act (42 U.S.C. 1395cc(b)(2)) and applicable regulations.

`(2) Notwithstanding any other provision of law, the Secretary of H ealth and Human Services and the Director of the Office of Personnel Management, and their agents, shall exchange any information necessary to implement this su bsection.'.

(b) EFFECTIVE DATES- The amendments made by this section apply to i npatient hospital admissions that occur on and after October 1, 1990.

SEC. 8006. PORTABILITY OF BENEFITS FOR EMPLOYEES CONVERTING TO THE CI VIL SERVICE SYSTEM.

(a) SHORT TITLE- This section may be cited as the `Portability of B enefits for Nonappropriated Fund Employees Act of 1990'.

(b) DEFINITIONAL AMENDMENT- Section 2105(c) of title 5, United Stat es Code, is amended--

(1) by amending paragraph (1) to read as follows:

`(1) laws administered by the Office of Personnel Management, e xcept--

`(A) section 7204;

`(B) as otherwise specifically provided in this title;

`(C) the Fair Labor Standards Act of 1938; or

`(D) for the purpose of entering into an interchange agreem ent to provide for the noncompetitive movement of employees between such instrum entalities and the competitive service; or'; and

(2) in paragraph (2), by striking `chapter 84' and inserting `c hapter 84 (except to the extent specifically provided therein)'.

(c) AMENDMENT RELATING TO ORDER OF RETENTION- Section 3502(a)(C) of title 5, United States Code, is amended to read as follows:

`(C) is entitled to credit for--

`(i) service rendered as an employee of a county commit tee established pursuant to section 8(b) of the Soil Conservation and Allotment Act or of a committee or association of producers described in section 10(b) of the Agricultural Adjustment Act; and

`(ii) service rendered as an employee described in sect ion 2105(c) if such employee moves or has moved, on or after January 1, 1987, wi thout a break in service of more than 3 days, from a position in a nonappropriat ed fund instrumentality of the Department of Defense or the Coast Guard to a pos ition in the Department of Defense or the Coast Guard, respectively, that is not described in section 2105(c).'.

(d) AMENDMENT RELATING TO PAY ON A CHANGE OF POSITION- Section 5334 of title 5, United States Code, is amended by adding at the end the following n ew subsection:

`(g) An employee of a nonappropriated fund instrumentality of the D epartment of Defense or the Coast Guard described in section 2105(c) who moves, without a break in service of more than 3 days, to a position in the Department of Defense or the Coast Guard, respectively, that is subject to this subchapter, may have such employee's initial rate of basic pay fixed at the minimum rate of the appropriate grade or at any step of such grade that does not exceed the hig hest previous rate of basic pay received by that employee during the employee's service described in section 2105(c). In the case of a nonappropriated fund empl oyee who is moved involuntarily from such nonappropriated fund instrumentality w ithout a break in service of more than 3 days and without substantial change in duties to a position that is subject to this subchapter, the employee's pay shal l be set at a rate (not above the maximum for the grade, except as may be provid ed for under section 5365) that is not less than the employee's rate of basic pa y under the nonappropriated fund instrumentality immediately prior to so moving. '.

(e) AMENDMENT RELATING TO PERIODIC STEP INCREASES- Section 5335 of title 5, United States Code, is amended by adding at the end the following new s ubsection:

`(g) In computing periods of service under subsection (a) in the ca se of an employee who moves without a break in service of more than 3 days from a position under a nonappropriated fund instrumentality of the Department of Def ense or the Coast Guard described in section 2105(c) to a position under the Dep artment of Defense or the Coast Guard, respectively, that is subject to this sub chapter, service under such instrumentality shall, under regulations prescribed by the Office, be deemed service in a position subject to this subchapter.'.

(f) AMENDMENT RELATING TO GRADE AND PAY RETENTION- Section 5365(b) of title 5, United States Code, is amended by adding at the end the following:

`Individuals with respect to whom authority under paragraph (2) may b e exercised include individuals who are moved without a break in service of more than 3 days from employment in nonappropriated fund instrumentalities of the De partment of Defense or the Coast Guard described in section 2105(c) to employmen t in the Department of Defense or the Coast Guard, respectively, that is not des cribed in section 2105(c).'.

(g) AMENDMENT RELATING TO PAY FOR ACCUMULATED AND ACCRUED LEAVE- Se ction 5551(a) of title 5, United States Code, is amended by adding at the end th e following new sentence: `For the purposes of this subsection, movement to empl oyment described in section 2105(c) shall not be deemed separation from the serv ice in the case of an employee whose annual leave is transferred under section 6 308(b).'.

(h) AMENDMENTS RELATING TO TRANSFERS BETWEEN POSITIONS UNDER DIFFER ENT LEAVE SYSTEMS- Section 6308 of title 5, United States Code, is amended--

(1) by inserting `(a)' before `The annual'; and

(2) by adding at the end the following new subsection:

`(b) The annual leave, sick leave, and home leave to the credit of a nonappropriated fund employee of the Department of Defense or the Coast Guard described in section 2105(c) who moves without a break in service of more than 3 days to a position in the Department of Defense or the Coast Guard, respectivel y, that is subject to this subchapter shall be transferred to the employee's cre dit. The annual leave, sick leave, and home leave to the credit of an employee o f the Department of Defense or the Coast Guard who is subject to this subchapter and who moves without a break in service of more than 3 days to a position unde r a nonappropriated fund instrumentality of the Department of Defense or the Coa st Guard, respectively, described in section 2105(c), shall be transferred to th e employee's credit under the nonappropriated fund instrumentality. The Secretar y of Defense or the Secretary of Transportation, as appropriate, may provide for a transfer of funds in an amount equal to the value of the transferred annual l eave to compensate the gaining entity for the cost of a transfer of annual leave under this subsection.'.

(i) AMENDMENTS TO INCLUDE ADDITIONAL SERVICE FOR LEAVE ACCRUAL PURP OSES- (1) Section 6312 is amended to read as follows:

`Sec. 6312. Accrual and accumulation for former ASCS county office an d nonappropriated fund employees

`(a) Credit shall be given in determining years of service for the purpose of section 6303(a) for--

`(1) service as an employee of a county committee established p ursuant to section 8(b) of the Soil Conservation and Allotment Act or of a commi ttee or an association of producers described in section 10(b) of the Agricultur al Adjustment Act; and

`(2) service under a nonappropriated fund instrumentality of th e Department of Defense or the Coast Guard described in section 2105(c) by an em ployee who has moved without a break in service of more than 3 days to a positio n subject to this subchapter in the Department of Defense or the Coast Guard, re spectively.

`(b) The provisions of subsections (a) and (b) of section 6308 for transfer of leave between leave systems shall apply to the leave systems establi shed for such county office employees and employees of such Department of Defens e and Coast Guard nonappropriated fund instrumentalities, respectively.'.
(2) The item relating to section 6312 in the table of sections for chapter 63 of title 5, United States Code, is amended to read as follows:
`6312. Accrual and accumulation for former ASCS county office and nonappropriated fund employees.'.

(j) Amendments Relating to the Civil Service Retirement System- (1) Section 8331 of title 5, United States Code, is amended--

(A) by striking `and' at the end of paragraph (1)(J);

(B) by inserting `and' after the semicolon at the end of paragr aph (1)(K);

(C) by inserting after paragraph (1)(K) the following new parag raph:

`(L) an employee described in section 2105(c) who has m ade an election under section 8347(p)(1) to remain covered under this subchapter ;';

(D) in paragraph (1)(ii), by striking the matter following `Gov ernment employees' through the semicolon and inserting `(besides any employee ex cluded by clause (x), but including any employee who has made an election under section 8347(p)(2) to remain covered by a retirement system established for empl oyees described in section 2105(c));'; and

(E) in paragraph (7), by striking `and Gallaudet College;' and inserting `Gallaudet College, and, in the case of an employee described in parag raph (1)(L), a nonappropriated fund instrumentality of the Department of Defense or the Coast Guard described in section 2105(c);'.

(2) Section 8347 of title 5, United States Code, is amended by addi ng at the end the following new subsection:

`(p)(1) Under regulations prescribed by the Office of Personnel Man agement, an employee of the Department of Defense or the Coast Guard who--< /ul>
`(A) has not previously made or had an opportunity to make an e lection under this subsection;

`(B) has 5 or more years of civilian service creditable under t his subchapter; and

`(C) moves, without a break in service of more than 3 days, to employment in a nonappropriated fund instrumentality of the Department of Defens e or the Coast Guard, respectively, described in section 2105(c),

shall be given the opportunity to elect irrevocably, within 30 days a fter such move, to remain covered as an employee under this subchapter during an y employment described in section 2105(c) after such move.

`(2) Under regulations prescribed by the Office of Personnel Manage ment, an employee of a nonappropriated fund instrumentality of the Department of Defense or the Coast Guard, described in section 2105(c), who--

`(A) has not previously made or had an opportunity to make an e lection under this subsection;

`(B) is a vested participant in a retirement system established for employees described in section 2105(c), as the term `vested participant' is defined by such system;

`(C) moves, without a break in service of more than 3 days, to a position in the Department of Defense or the Coast Guard, respectively, that i s not described in section 2105(c); and

`(D) is excluded from coverage under chapter 84 by section 8402 (b),

shall be given the opportunity to elect irrevocably, within 30 days a fter such move, to remain covered, during any subsequent employment as an employ ee as defined in section 2105(a) or section 2105(c), by the retirement system ap plicable to such employee's current or most recent employment described in secti on 2105(c) rather than be subject to this subchapter.'.

(k) AMENDMENTS RELATING TO THE FEDERAL EMPLOYEES' RETIREMENT SYSTEM - (1) Section 8401 of title 5, United States Code, is amended--

(A) in paragraph (11)--

(i) by striking `and' at the end of subparagraph (A);< /ul>

(ii) by inserting `and' after the semicolon at the end of s ubparagraph (B);

(iii) by inserting after subparagraph (B) the following new subparagraph:

`(C) an employee described in section 2105(c) who has made an election under section 8461(n)(1) to remain covered under this chapter;';

(iv) by striking `or' at the end of clause (ii);
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(v) by inserting `or' after the semicolon at the end of cla use (iii); and

(vi) by inserting after clause (iii) the following new clau se:

`(iv) an employee who has made an election under sectio n 8461(n)(2) to remain covered by a retirement system established for employees described in section 2105(c);'; and

(B) in paragraph (15), by striking `and Gallaudet College;' and inserting `, Gallaudet College, and, in the case of an employee described in pa ragraph (11)(C), a nonappropriated fund instrumentality of the Department of Def ense or the Coast Guard described in section 2105(c);'.

(2) Section 8461 of title 5, United States Code, is amended by addi ng at the end the following new subsection:

`(n)(1) Under regulations prescribed by the Office, an employee of the Department of Defense or the Coast Guard who--

`(A) has not previously made or had an opportunity to make an e lection under this subsection;

`(B) has 5 or more years of civilian service creditable under t his chapter; and

`(C) moves, without a break in service of more than 3 days, to employment in a nonappropriated fund instrumentality of the Department of Defens e or the Coast Guard, respectively, described in section 2105(c),

shall be given the opportunity to elect irrevocably, within 30 days a fter such move, to remain covered as an employee under this chapter during any e mployment described in section 2105(c) after such move.

`(2) Under regulations prescribed by the Office, an employee of a n onappropriated fund instrumentality of the Department of Defense or the Coast Gu ard described in section 2105(c), who--

`(A) has not previously made or had an opportunity to make an e lection under this subsection;

`(B) is a vested participant in a retirement system established for employees described in section 2105(c), as the term `vested participant' is defined by such system;

`(C) moves, without a break in service of more than 3 days, to a position in the Department of Defense or the Coast Guard, respectively, that i s not described by section 2105(c); and

`(D) is not eligible to make an election under section 8347(p),

shall be given the opportunity to elect irrevocably, within 30 days a fter such move, to remain covered, during any subsequent employment as an employ ee as defined by section 2105(a) or section 2105(c), by the retirement system ap plicable to such employee's current or most recent employment described by secti on 2105(c) rather than be subject to this chapter.'.

(l) AMENDMENTS RELATING TO HEALTH BENEFITS- Section 8901(3)(A) of t itle 5, United States Code, is amended--

(1) by striking `or' at the end of clause (ii);

(2) by inserting `or' after the semicolon at the end of clause (iii); and

(3) by inserting after clause (iii) the following new clause:

`(iv) on an immediate annuity under a retirement system established for employees described in section 2105(c), in the case of an indiv idual who elected under section 8347(p)(2) or 8461(n)(2) to remain subject to su ch a system;'.

(m) APPLICABILITY- (1) The amendments made by this section shall ap ply with respect to any individual who, on or after January 1, 1987--

(A) moves without a break in service of more than 3 days from e mployment in a nonappropriated fund instrumentality of the Department of Defense or the Coast Guard that is described in section 2105(c) of title 5, United Stat es Code, to employment in the Department of Defense or the Coast Guard, respecti vely, that is not described in such section 2105(c); or

(B) moves without a break in service from employment in the Dep artment of Defense or the Coast Guard that is not described in such section 2105 (c) to employment in a nonappropriated fund instrumentality of the Department of Defense or the Coast Guard, respectively, that is described in such section 210 5(c).

(2) The Secretary of Defense, the Secretary of Transportation, the Director of the Office of Personnel Management, and the Executive Director of th e Federal Retirement Thrift Investment Board, as applicable, shall take such act ions as may be practicable to ensure that each individual who has moved as descr ibed under paragraph (1) on or after January 1, 1987, and before the date of ena ctment of this Act, receives the benefit of the amendments made by this section as if such amendments had been in effect at the time such individual so moved. E ach such individual who wishes to make an election of retirement coverage under the amendments made by subsection (j) or (k) of this section shall complete such election within 180 days after the date of enactment of this Act.

(n) CLARIFYING PROVISIONS RELATING TO TREATMENT OF INDIVIDUALS ELEC TING TO REMAIN SUBJECT TO THEIR FORMER RETIREMENT SYSTEM- (1) For the purpose of this section, the term `nonappropriated fund instrumentality' means a nonapprop riated fund instrumentality of the Department of Defense or the Coast Guard, des cribed in section 2105(c) of title 5, United States Code.

(2)(A) If an individual makes an election under section 8347(p)(1) of title 5, United States Code, to remain covered by subchapter III of chapter 8 3 of such title, any nonappropriated fund instrumentality thereafter employing s uch individual shall deduct from such individual's pay and contribute to the Thr ift Savings Fund such sums as are required for such individual in accordance wit h section 8351 of such title.

(B) Notwithstanding subsection (a) or (b) of section 8432 of title 5, United States Code, any individual who, as of the date of enactment of this A ct, becomes eligible to make an election under section 8347(p)(1) of such title may, within 30 days after such individual makes an election thereunder in accord ance with section 13(b), make any election described in section 8432(b)(1)(A) of such title.

(3)(A) If an individual makes an election under section 8461(n)(1) of title 5, United States Code, to remain covered by chapter 84 of such title, a ny nonappropriated fund instrumentality thereafter employing such individual sha ll deduct from such individual's pay and shall contribute to the Thrift Savings Fund the funds deducted, together with such other sums as are required for such individual under subchapter III of such chapter.

(B) Notwithstanding subsection (a) or (b) of section 8432 of title 5, United States Code, any individual who, as of the date of enactment of this A ct, becomes eligible to make an election under section 8461(n)(1) of such title may, within 30 days after such individual makes an election thereunder in accord ance with section 13(b), make any election described in section 8432(b)(1)(A) of such title.

(4) If an individual makes an election under section 8347(p)(2) or 8461(n)(2) of title 5, United States Code, to remain covered by a retirement sys tem established for employees described in section 2105(c) of such title, any Go vernment agency thereafter employing such individual shall, in lieu of any deduc tions or contributions for which it would otherwise be responsible with respect to such individual under chapter 83 or 84 of such title, make such deductions fr om pay and such contributions as would be required (under the retirement system for nonappropriated fund employees involved) if it were a nonappropriated fund i nstrumentality. Any such deductions and contributions shall be remitted to the D epartment of Defense or the Coast Guard, as applicable, for transmission to the appropriate retirement system.

SEC. 8007. FEDERAL EMPLOYEE HEALTH BENEFITS REFORM.

(a) HOSPITALIZATION-COST-CONTAINMENT MEASURES- Section 8902 of titl e 5, United States Code, is amended by adding at the end the following:

`(n) A contract for a plan described by section 8903(1), (2), or (3 ), or section 8903a, shall require the carrier--

`(1) to implement hospitalization-cost-containment measures, in cluding measures--

`(A) for verifying the medical necessity of any proposed tr eatment or surgery;

`(B) for determining the feasibility or appropriateness of providing services on an outpatient rather than on an inpatient basis;

`(C) for determining the appropriate length of stay (throug h concurrent review or otherwise) in cases involving inpatient care; and

`(D) involving cases management, if the circumstances so wa rrant; and

`(2) to establish incentives to encourage compliance with measu res under paragraph (1).'.

`(b) IMPROVED CASH MANAGEMENT- Section 8909(a) of title 5, United S tates Code, is amended by adding at the end (as a flush left sentence) the follo wing:

`Payments from the Fund to a plan participating in a letter-of-credit arrangement under this chapter shall, in connection with any payment or reimbur sement to be made by such plan for a health service or supply, be made only on a checks-presented basis (as defined under regulations of the Department of the T reasury).'.

(c) IMPROVED COORDINATION WITH MEDICARE- Section 8910 of title 5, U nited States Code, is amended by adding at the end the following:

`(d) The Office, in consultation with the Department of Health and Human Services, shall develop and implement a system through which the carrier f or an approved health benefits plan described by section 8903 or 8903a will be a ble to identify those annuitants or other individuals covered by such plan who a re entitled to benefits under part A or B of title XVIII of the Social Security Act in order to ensure that payments under coordination of benefits with Medicar e do not exceed the statutory maximums which physicians may charge Medicare enro llees.'.

(d) EFFECTIVE DATE- The amendments made by this section shall be ef fective as of January 1, 1991, and shall apply with respect to contract years be ginning on or after that date.

SEC. 8008. 10-YEAR PERIOD OF LIMITATION ON COLLECTION AFTER ASSESSMEN T.

(a) In general- Subsection (a) of section 6502 of the Internal Reve nue Code of 1986 (relating to collection after assessment) is amended--

(1) by striking `6 years' in paragraph (1) and inserting `10 ye ars', and

(2) by striking `6-year period' in paragraph (2) and inserting `10-year period'.

(b) Effective Date- The amendments made by subsection (a) shall app ly to levies made, proceedings begun, or agreements made after the date of the e nactment of this Act, with respect to assessments made after such date or assess ments pending on such date (determined without regard to the amendments made by this section).

TITLE IX--COMMITTEE ON THE JUDICIARY

SEC. 9001. PATENT AND TRADEMARK OFFICE USER FEES.

(a) SURCHARGES- There shall be a surcharge, during fiscal years 199 1 through 1995, of 56 percent, rounded by standard arithematic rules, on all fee s authorized by subscriptions (a) and (b) of section 41 of title 35, United Stat es Code.

(b) USE OF SURCHARGES- Notwithstanding section 3302 of title 31, Un ited States Code, beginning in fiscal year 1991, all surcharges collected by the Patent and Trademark Office shall be credited to a separate account established in the Department of Treasury and ascribed to the Patent and Trademark activiti es of the Department of Commerce as offsetting receipts, to be available only to the Patent and Trademark Office to the extent provided in advance in appropriat ions acts for all authorized activities and operations of the Office, and to rem ain available until expended.

(c) REVISIONS- In fiscal years 1991 through 1995, surcharges establ ished under subsection (a) may be revised periodically by the Commissioner of Pa tents and Trademarks, subject to the provisions of section 553 of title 5, Unite d States Code, in order to ensure that the following amounts, of patent and trad emark user fees are collected.

(1) $91,000,000 in fiscal year 1991.

(2) $95,000,000 in fiscal year 1992.

(3) $99,000,000 in fiscal year 1993.

(4) $103,000,000 in fiscal year 1994.

(5) $107,000,000 in fiscal year 1995.

(d) REPEAL- Section 105(a) of Public Law 100-703 (102 Stat. 4675) i s repealed.

(e) REPORT ON FEES- The Commissioner of Patents and Trademarks shal l study the structure of all fees collected by the Patent and Trademark Office a nd, not later than May 1, 1991, shall submit to the Congress a report on all fee s to be collected by the office in fiscal years 1992 through 1995. The report sh all include a proposed schedule of fees that would distribute the surcharge prov ided by subsection (a) among all fees collected by the office, and recommendatio ns for any statutory changes that may be necessary to implement the proposals co ntained in the report.

SEC. 9002. FEDERAL AGENCY STATUS.

For the purposes of Federal law, the Patent and Trademark Office sh all be considered a Federal Agency. In particular, the Patent and Trademark Offi ce shall be subject to all Federal laws pertaining to the procurement of goods a nd services that would apply to a Federal agency using appropriated funds, inclu ding the Federal Property and Administrative Services Act of 1949 and the Office of Federal Procurement Policy Act.

SEC. 9003. EFFECT ON OTHER LAW.

Except for section 6001(d), nothing in this title affects the provi sions of Public Law 100-703 (102 Stat. 4674 and following).

TITLE X--LABOR

SEC. 10001. SHORT TITLE AND TABLE OF CONTENTS.

(a) SHORT TITLE- This title may be cited as the `Labor Reconciliati on Act of 1990'.

(b) TABLE OF CONTENTS- The table of contents is as follows:
Sec. 10001. Short title and table of contents.

Subtitle A--Education Provisions

Sec. 10101. Initial disbursement and endorsement requirements.

Sec. 10102. Ineligibility based on high default rates.
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Sec. 10103. Ability to benefit.

Sec. 10104. Maximum loan amounts.

Sec. 10105. Amendments to bankruptcy laws.

Sec. 10106. Sunset provision.

Subtitle B--Labor-Related Penalties

Sec. 10201. Occupational safety and health.

Sec. 10202. Mine safety and health.

Subtitle C--Employee Retirement Income

Part 1--Treatment of Reversions of Qualified Plan Assets to Employers .

Sec. 10301. Increase in Reversion Tax.

Sec. 10302. Requirement of Replacement Plan for Portion of Excess Assets.

Sec. 10303. Effective Date.

Part 2--Transfers to Retiree Health Accounts

Sec. 10311. Transfer of excess pension assets to retiree health a ccounts.

Sec. 10312. Application of ERISA to transfers of excess pension a ssets to retiree health accounts.

Part 3--Premium Rates

Sec. 10321. Increase in premium rates.

Subtitle A--Education Provisions

SEC. 10101. INITIAL DISBURSEMENT AND ENDORSEMENT REQUIREMENTS.
(a) AMENDMENT- Section 428G(b)(1) of the Higher Education Act of 19 65 (20 U.S.C. 1078-7(b)(1)) is amended to read as follows:

`(b) Initial Disbursement and Endorsement Requirements-

`(1) FIRST YEAR STUDENTS- The first installment of the proceeds of any loan made, insured, or guaranteed under this part that is made to a stud ent borrower who is entering the first year of an undergraduate program of posts econdary education, and who has not previously obtained a loan under this part, shall not (regardless of the amount of such loan or the duration of the period o f enrollment) be endorsed by the eligible institution until 30 days after the bo rrower begins a course of study but may be delivered to the eligible institution prior to the end of the 30-day period.'.

(b) EFFECTIVE DATE- The amendment made by this section shall be eff ective for loans made on or after the date of enactment to cover periods of inst ruction beginning on or after January 1, 1991.

SEC. 10102. INELIGIBILITY BASED ON HIGH DEFAULT RATES.

(a) IN GENERAL- Section 435(a) of the Higher Education Act of 1965 (20 U.S.C. 1085(a)) is amended by adding at the end the following new paragraph:

`(3) INELIGIBILITY BASED ON HIGH DEFAULT RATES- (A) An institut ion whose cohort default rate, as defined in section 435(m), is equal to or grea ter than the threshold specified in subparagraph (B) for each of the three immed iately preceding fiscal years for which data are available shall not be eligible to participate in a program under this title unless, within 30 days of receivin g notification from the Secretary of the loss of eligibility under this paragrap h, the institution appeals the loss of its eligibility to the Secretary. Upon ap peal, the Secretary may permit such institution to continue to participate in a program under this title if the institution demonstrates to the satisfaction of the Secretary that--

`(i) the Secretary's calculation of its cohort default rate is not accurate, and that recalculation would reduce its cohort default rate fo r any of the three fiscal years below the threshold level specified in subparagr aph (B); or

`(ii) there are, in the judgment of the Secretary, exceptio nal mitigating circumstances that would make the application of this paragraph i nequitable, except that, during the pendency of an appeal based in whole or in p art upon this clause, the Secretary may suspend the eligibility of the instituti on in accordance with his authority to take emergency actions under section 487( c)(1)(E).

`(B) For purposes of subparagraph (A), the threshold level for each of the three fiscal years immediately preceding--

`(i) fiscal year 1991 is 40 percent;

`(ii) fiscal year 1992 is 30 percent; and

`(iii) fiscal year 1993 and each succeeding fiscal year is 25 percent.'.

(b) EFFECTIVE DATE- The amendment made by this section shall be eff ective July 1, 1991.

SEC. 10103. ABILITY TO BENEFIT.

(a) IN GENERAL- Section 484(d) of the Higher Education Act of 1965 (20 U.S.C. 1091(d)) is amended--

(1) by redesignating subparagraphs (A) and (B) of paragraph (3) as clauses (i) and (ii), respectively;

(2) by redesignating paragraphs (1), (2), and (3) as subparagra phs (A), (B), and (C), respectively;

(3) by inserting `(1)' before `A student who is admitted';

(4) by designating the second sentence of paragraph (1) (as des ignated by paragraph (3) of this subsection) as paragraph (2); and

(5) by adding at the end the following new paragraph:

`(3) In order for a student who is admitted on the basis of ability to benefit from the education or training offered to be eligible for any loan u nder part B of this title, the student shall, prior to enrollment, pass an indep endently administered examination approved by the Secretary.'.

(b) CONFORMING AMENDMENT- Section 481(b) of the Higher Education Ac t of 1965 (20 U.S.C. 1088(b)) is amended in the fourth sentence by inserting `, except in accordance with section 484(d) of this Act,' after `shall not'.
(c) EFFECTIVE DATE- The amendments made by this section shall be ef fective for any loan made not earlier than the date of enactment of this Act to cover a period of instruction beginning not earlier than January 1, 1991.
SEC. 10104. MAXIMUM LOAN AMOUNTS.

(a) EFFECTIVE DATE EXTENSION- Paragraph (2) of section 2003(b) of t he Omnibus Budget Reconciliation Act of 1989 is amended by striking `1991' and i nserting `1996'.

(b) MAXIMUM LOAN AMOUNTS- Paragraph (1) of section 428A(b) of the H igher Education Act of 1965 (20 U.S.C. 1078-1(b)) is amended by striking `9 cons ecutive' and inserting `7 consecutive'.

SEC. 10105. AMENDMENTS TO BANKRUPTCY LAWS.

(a) AUTOMATIC STAY AND PROPERTY OF THE ESTATE-

(1) ACTION BY AN AGENCY- Section 362(b) of title 11, United Sta tes Code, is amended--

(A) in paragraph (12), by striking `or' at the end;

(B) in paragraph (13), by striking the period at the end and in serting a semicolon; and

(C) by inserting immediately following paragraph (13) the follo wing new paragraphs:

`(14) under subsection (a) of this section, of any action by an accrediting agency regarding the accreditation status of the debtor as an educa tional institution;

`(15) under subsection (a) of this section, of any action by a State licensing body regarding the licensure of the debtor as an educational ins titution; or

`(16) under subsection (a) of this section, of any action by a guaranty agency, as defined in section 435(j) of the Higher Education Act of 196 5 (20 U.S.C. 1001 et seq.) or the Secretary of Education regarding the eligibili ty of the debtor to participate in programs authorized under such Act.'.

(2) ELIGIBILITY TO PARTICIPATE IN HIGHER EDUCATION PROGRAMS- Se ction 541(b) of title 11, United States Code, is amended--

(A) in paragraph (1), by striking `or' at the end;

(B) in paragraph (2), by striking the period at the end and ins erting a semicolon and `or'; and

(C) by adding at the end the following new paragraph:

`(3) any eligibility of the debtor to participate in programs a uthorized under the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.; 42 U.S .C. 2751 et seq.), or any accreditation status or State licensure of the debtor as an educational institution.'.

(3) EFFECTIVE DATE- The amendments made by this subsection shal l be effective on the date of enactment of this Act.

(b) TREATMENT OF CERTAIN EDUCATION LOANS IN BANKRUPTCY PROCEEDINGS-

(1) DISCHARGE- Section 1328(a)(2) of title 11, United States Co de, is amended by striking `section 523(a)(5)' and inserting `paragraph (5) or ( 8) of section 523(a)'.

(2) COMMENCED CASES- The amendment made by paragraph (1) shall not apply to any case under the provisions of title 11, United States Code, comm enced before the date of the enactment of this Act.

SEC. 10106. SUNSET PROVISION.

The amendments made by this subtitle shall cease to have effect on September 30, 1996.

Subtitle B--Labor-Related Penalties

SEC. 10201. OCCUPATIONAL SAFETY AND HEALTH.

(a) IN GENERAL- Section 17 of the Occupational Safety and Health Ac t of 1970 (29 U.S.C. 666) is amended--

(1) in subsection (a), by striking `$10,000 for each violation' and inserting `$50,000 for each violation';

(2) in subsection (b), by striking `$1,000 for each such violat ion' and inserting `$5,000 for each such violation';

(3) in subsection (c), by striking `$1,000 for each such violat ion' and inserting `$5,000 for each such violation';

(4) in subsection (d), by striking `$1,000' and inserting `$5,0 00';

(5) in subsection (j) (as redesignated), by striking `$1,000' a nd inserting `$5,000'; and

SEC. 10202. MINE SAFETY AND HEALTH.

Section 110(a) of the Federal Mine Safety and Health Act of 1977 (3 0 U.S.C. 820(a)) is amended by striking `$10,000' and inserting `$30,000'.< /ul>
Subtitle C--Employee Retirement Income

PART 1--TREATMENT OF REVERSIONS OF QUALIFIED PLAN ASSETS TO EMPLO YERS

SEC. 10301. INCREASE IN REVERSION TAX.

Section 4980(a) of the Internal Revenue Code of 1986 (relating to t ax on reversion of qualified plan assets to employer) is amended by striking `15 percent' and inserting `20 percent'.

SEC. 10302. REQUIREMENT OF REPLACEMENT PLAN FOR PORTION OF EXCESS ASS ETS.

(a) IN GENERAL- Section 4980 of the Internal Revenue Code of 1986 i s amended by adding at the end the following new subsection:

`(d) INCREASE IN TAX FOR FAILURE TO ESTABLISH REPLACEMENT PLAN OR I NCREASE BENEFITS-

`(1) IN GENERAL- Subsection (a) shall be applied by substitutin g `40 percent' for `20 percent' with respect to any employer reversion from a qu alified plan unless--

`(A) the employer establishes or maintains a qualified repl acement plan, or

`(B) the plan provides benefit increases meeting the requir ements of paragraph (3).

`(2) QUALIFIED REPLACEMENT PLAN- For purposes of this subsectio n, the term `qualified replacement plan' means a qualified plan established or m aintained by the employer in connection with a qualified plan termination (herei nafter referred to as the `replacement plan') with respect to which the followin g requirements are met:

`(A) PARTICIPATION REQUIREMENT- Substantially all of the ac tive participants in the terminated plan are active participants in the replacem ent plan.

`(B) ASSET TRANSFER REQUIREMENT-

`(i) 20 PERCENT CUSHION- A direct transfer from the ter minated plan to the replacement plan is made before any employer reversion in an amount equal to the excess (if any) of--

`(I) 20 percent of the maximum amount which the emp loyer could receive as an employer reversion without regard to this subsection, over

`(II) the amount determined under clause (ii).

`(ii) REDUCTION FOR INCREASE IN BENEFITS- The amount de termined under this clause is an amount equal to the present value of the aggreg ate increases in the nonforfeitable accrued benefits under the terminated plan o f any participants (including nonactive participants) pursuant to a plan amendme nt which--

`(I) is adopted during the 60-day period ending on the date of termination of the qualified plan, and

`(II) takes effect immediately on the termination d ate.

`(iii) TREATMENT OF AMOUNT TRANSFERRED- In the case of the transfer of any amount under clause (i)--

`(I) such amount shall not be includible in the gro ss income of the employer,

`(II) no deduction shall be allowable with respect to such transfer, and

`(III) such transfer shall not be treated as an emp loyer reversion for purposes of this section.

`(C) ALLOCATION REQUIREMENTS-

`(i) IN GENERAL- In the case of any defined contributio n plan, the portion of the amount transferred to the replacement plan under subp aragraph (B)(i) is--

`(I) allocated under the plan to the accounts of pa rticipants in the plan year in which the transfer occurs, or

`(II) credited to a suspense account and allocated from such account to accounts of participants no less rapidly than ratably over the 7-plan-year period beginning with the year of the transfer (or, if any limit ation under section 415 applies, the period allowable under such section).< /ul>

`(ii) TREATMENT OF INCOME- Any income on any amount cre dited to a suspense account under clause (i)(II) shall be allocated to accounts of participants no less rapidly than ratably over the remainder of the period de termined under such clause.

`(iii) UNALLOCATED AMOUNTS AT TERMINATION- If any amoun t credited to a suspense account under clause (i)(II) is not allocated as of the termination date of the plan--

`(I) such amount shall be allocated to the accounts of participants as of such date, except that any amount which may not be alloca ted by reason of any limitation under section 415 shall be allocated to the acco unts of other participants, and

`(II) if any portion of such amount may not be allo cated to other participants under subclause (I) by reason of such limitation, su ch portion shall be treated as an employer reversion to which this section appli es.

`(3) BENEFIT INCREASES- The requirements of this paragraph are met if either of the following requirements are met:

`(A) Pro rata increase in benefits-

`(i) IN GENERAL- A plan amendment to the terminated pla n is adopted in connection with the termination of the plan which provides pro r ata increases in the nonforfeitable accrued benefits of all participants (includ ing nonactive participants) which--

`(I) have an aggregate present value not less than 15 percent of the maximum amount which the employer could receive as an employer reversion without regard to this subsection, and

`(II) take effect immediately on the termination da te.

`(ii) PRO RATA INCREASE- For purposes of clause (i), a pro rata increase is an increase in the nonforfeitable accrued benefit of each p articipant (including nonactive participants) in an amount which bears the same ratio to the aggregate amount determined under clause (i)(I) as--

`(I) the present value of such participant's nonfor feitable accrued benefit (determined without regard to this subsection), bears t o

`(II) the aggregate present value of nonforfeitable accrued benefits of the terminated plan (as so determined).

Notwithstanding the preceding sentence, the aggregate inc reases in the nonforfeitable accrued benefits of nonactive participants shall no t exceed 40 percent of the aggregate amount determined under clause (i)(I).

`(B) BENEFIT INCREASE OF 20 PERCENT OR GREATER- The aggrega te present value of the increases in nonforfeitable accrued benefits described i n paragraph (2)(B)(ii) is 20 percent or more of the maximum amount which the emp loyer could receive as an employer reversion without regard to this subsection.

`(4) COORDINATION WITH OTHER PROVISIONS-

`(A) LIMITATIONS- A benefit may not be increased under para graph (2)(B)(ii) or (3)(A), and an amount may not be allocated to a participant under paragraph (2)(C), if such increase or allocation would result in a failure to meet any requirement under section 401(a)(4) or 415.

`(B) TREATMENT AS EMPLOYER CONTRIBUTIONS- Any increase in b enefits under paragraph (2)(B)(ii) or (3)(A), or any allocation of any amount (o r income allocable thereto) to any account under paragraph (2)(C), shall be trea ted as an employer contribution for purposes of section 415.

`(C) 10-YEAR PARTICIPATION REQUIREMENT- Except as provided by the Secretary, section 415(b)(5)(D) shall not apply to any increase in benefi ts by reason of this subsection to the extent that the application of this subpa ragraph does not discriminate in favor of highly compensated employees (as defin ed in section 414(q)).

`(5) DEFINITIONS AND SPECIAL RULES- For purposes of this subsec tion--

`(A) NONACTIVE PARTICIPANT- The term `nonactive participant ' means an individual who--

`(i) is a participant in pay status as of the terminati on date,

`(ii) is a beneficiary who has a nonforfeitable right t o an accrued benefit under the terminated plan as of the termination date, or

`(iii) is a participant not described in clause (i) or (ii)--

`(I) who has a nonforfeitable right to an accrued b enefit under the terminated plan as of the termination date, and

`(II) whose service, which was creditable under the terminated plan, terminated during the period beginning 3 years before the term ination date and ending with the date on which the final distribution of assets occurs.

`(B) PRESENT VALUE- Present value shall be determined as of the termination date and on the same basis as liabilities of the plan are deter mined on termination.

`(C) REALLOCATION OF INCREASE- Except as provided in paragr aph (2)(C), if any benefit increase is reduced by reason of the last sentence of paragraph (3)(A)(ii) or paragraph (4), the amount of such reduction shall be al located to the remaining participants on the same basis as other increases (and shall be treated as meeting any allocation requirement of this subsection).

`(D) AGGREGATION OF PLANS- The Secretary may provide that 2 or more plans may be treated as 1 plan for purposes of determining whether ther e is a qualified replacement plan under paragraph (2).

`(6) SUBSECTION NOT TO APPLY TO EMPLOYER IN BANKRUPTCY- This su bsection shall not apply to an employer who, as of the termination date of the q ualified plan, is in bankruptcy liquidation under chapter 7 of title 11 of the U nited States Code.'

(b) AMENDMENTS TO EMPLOYEE RETIREMENT INCOME SECURITY ACT-
(1) FIDUCIARY RESPONSIBILITY- Section 404 of the Employee Retir ement Income Security Act of 1974 (29 U.S.C. 1104) is amended by adding at the e nd the following new subsection:

`(d)(1) If, in connection with the termination of a single-employer plan, an employer elects to establish or maintain a qualified replacement plan, or to increase benefits, as provided under section 4980(d) of the Internal Reve nue Code of 1986, a fiduciary shall discharge the fiduciary's duties under this title and title IV in accordance with the following requirements:

`(A) In the case of a fiduciary of the terminated plan, any req uirement--

`(i) under section 4980(d)(2)(B) of such Code with respect to the transfer of assets from the terminated plan to a qualified replacement pl an, and

`(ii) under section 4980(d)(2)(B)(ii) or 4980(d)(3) of such Code with respect to any increase in benefits under the terminated plan.

`(B) In the case of a fiduciary of a qualified replacement plan , any requirement--

`(i) under section 4980(d)(2)(A) of such Code with respect to participation in the qualified replacement plan of active participants in the terminated plan,

`(ii) under section 4980(d)(2)(B) of such Code with respect to the receipt of assets from the terminated plan, and

`(iii) under section 4980(d)(2)(C) of such Code with respec t to the allocation of assets to participants of the qualified replacement plan.

`(2) For purposes of this subsection--

`(A) any term used in this subsection which is also used in sec tion 4980(d) of the Internal Revenue Code of 1986 shall have the same meaning as when used in such section, and

`(B) any reference in this subsection to the Internal Revenue C ode of 1986 shall be a reference to such Code as in effect on January 1, 1991.'

(2) CONFORMING AMENDMENTS-

(A) Section 404(a)(1)(D) of such Act (29 U.S.C. 1104(a)(1)( D)) is amended by striking `or title IV' and inserting `and title IV'.

(B) Section 4044(d)(1) of such Act (29 U.S.C. 1344(d)(1)) i s amended by inserting `, section 404(d) of this Act, and section 4980(d) of the Internal Revenue Code of 1986 (as in effect on January 1, 1991)' after `paragra ph (3)'.

SEC. 10303. EFFECTIVE DATE.

(a) IN GENERAL- Except as provided in subsection (b), the amendment s made by this part all apply to reversions occurring after September 30, 1990.

(b) EXCEPTION- The amendments made by this part shall not apply to any reversion after September 30, 1990, if--

(1) in the case of plans subject to title IV of the Employee Re tirement Income Security Act of 1974, a notice of intent to terminate under such title was provided to participants (or if no participants, to the Pension Benef it Guaranty Corporation) before October 1, 1990, or

(2) in the case of plans subject to title I (and not to title I V) of such Act, a notice of intent to reduce future accruals under section 204(h ) of such Act was provided to participants in connection with the termination be fore October 1, 1990.

PART 2--TRANSFERS TO RETIREE HEALTH ACCOUNTS

SEC. 10311. TRANSFER OF EXCESS PENSION ASSETS TO RETIREE HEALTH ACCOU NTS.

(a) IN GENERAL- Part I of subchapter D of chapter 1 of the Internal Revenue Code of 1986 (relating to pension, profit-sharing, and stock bonus plan s) is amended by adding at the end the following new subpart:

`Subpart E--Treatment of Transfers to Retiree Health Accounts

`Sec. 420. Transfers of excess pension assets to retiree health a ccounts.

`SEC. 420. TRANSFERS OF EXCESS PENSION ASSETS TO RETIREE HEALTH ACCOU NTS.

`(a) GENERAL RULE- If there is a qualified transfer of any excess p ension assets of a defined benefit plan (other than a multiemployer plan) to a h ealth benefits account which is part of such plan--

`(1) a trust which is part of such plan shall not be treated as failing to meet the requirements of subsection (a) or (h) of section 401 solely by reason of such transfer (or any other action authorized under this section),

`(2) no amount shall be includible in the gross income of the e mployer maintaining the plan solely by reason of such transfer,

`(3) such transfer shall not be treated--

`(A) as an employer reversion for purposes of section 4980, or

`(B) as a prohibited transaction for purposes of section 49 75, and

`(4) the limitations of subsection (d) shall apply to such empl oyer.

`(b) QUALIFIED TRANSFER- For purposes of this section--

`(1) IN GENERAL- The term `qualified transfer' means a transfer --

`(A) of excess pension assets of a defined benefit plan to a health benefits account which is part of such plan in a taxable year beginning after December 31, 1990,

`(B) which does not contravene any other provision of law, and

`(C) with respect to which the plan meets--
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`(i) the use requirements of subsection (c)(1),

`(ii) the vesting requirements of subsection (c)(2), an d

`(iii) the minimum benefit requirements of subsection ( c)(3).

`(2) Only 1 transfer per year-

`(A) IN GENERAL- No more than 1 transfer with respect to an y plan during a taxable year may be treated as a qualified transfer for purposes of this section.

`(B) EXCEPTION- A transfer described in paragraph (4) shall not be taken into account for purposes of subparagraph (A).

`(3) LIMITATION ON AMOUNT TRANSFERRED- The amount of excess pen sion assets which may be transferred in a qualified transfer shall not exceed th e amount which is reasonably estimated to be the amount the employer maintaining the plan will pay (whether directly or through reimbursement) out of such accou nt during the taxable year of the transfer for qualified current retiree health liabilities.

`(4) Special rule for 1990-

`(A) IN GENERAL- Subject to the provisions of subsection (c ), a transfer shall be treated as a qualified transfer if such transfer--

`(i) is made after the close of the taxable year preced ing the employer's first taxable year beginning after December 31, 1990, and bef ore the earlier of--

`(I) the due date (including extensions) for the fi ling of the return of tax for such preceding taxable year, or

`(II) the date such return is filed, and
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`(ii) does not exceed the expenditures of the employer for qualified current retiree health liabilities for such preceding taxable year .

`(B) REDUCTION IN DEDUCTION- The amount of the deductions o therwise allowable under this chapter to an employer for the taxable year preced ing the employer's first taxable year beginning after December 31, 1990, shall b e reduced by the amount of any qualified transfer to which this paragraph applie s.

`(C) COORDINATION WITH REDUCTION RULE- Subsection (e)(1)(B) shall not apply to a transfer described in subparagraph (A).

`(5) EXPIRATION- No transfer in any taxable year beginning afte r December 31, 1995, shall be treated as a qualified transfer.

`(c) Requirements of Plans Transferring Assets-

`(1) USE OF TRANSFERRED ASSETS-

`(A) IN GENERAL- Any assets transferred to a health benefit s account in a qualified transfer (and any income allocable thereto) shall be us ed only to pay qualified current retiree health liabilities (other than liabilit ies of key employees not taken into account under subsection (e)(1)(D)) for the taxable year of the transfer (whether directly or through reimbursement).

`(B) Amounts not used to pay for health benefits-

`(i) IN GENERAL- Any assets transferred to a health ben efits account in a qualified transfer (and any income allocable thereto) which a re not used as provided in subparagraph (A) shall be transferred out of the acco unt to the transferor plan.

`(ii) TAX TREATMENT OF AMOUNTS- Any amount transferred out of an account under clause (i)--

`(I) shall not be includible in the gross income of the employer for such taxable year, but

`(II) shall be treated as an employer reversion for purposes of section 4980.

`(C) ORDERING RULE- For purposes of this section, any amoun t paid out of a health benefits account shall be treated as paid first out of th e assets and income described in subparagraph (A).

`(2) REQUIREMENTS RELATING TO PENSION BENEFITS ACCRUING BEFORE TRANSFER-

`(A) IN GENERAL- The requirements of this paragraph are met if the plan provides that the accrued pension benefits of any participant or be neficiary under the plan become nonforfeitable in the same manner which would be required if the plan had terminated immediately before the qualified transfer ( or in the case of a participant who separated during the 1-year period ending on the date of the transfer, immediately before such separation).

`(B) SPECIAL RULE FOR 1990- In the case of a qualified tran sfer described in subsection (b)(4), the requirements of this paragraph are met with respect to any participant who separated from service during the taxable ye ar to which such transfer relates by recomputing such participant's benefits as if subparagraph (A) had applied immediately before such separation.

`(3) MINIMUM BENEFIT REQUIREMENTS-

`(A) IN GENERAL- The requirements of this paragraph are met if each health plan or arrangement under which applicable health benefits are p rovided provides that the applicable employer cost for each taxable year during the benefit maintenance period shall not be less than the higher of the applicab le employer costs for each of the 2 taxable years immediately preceding the taxa ble year of the qualified transfer.

`(B) APPLICABLE EMPLOYER COST- For purposes of this paragra ph, the term `applicable employer cost' means, with respect to any taxable year, the amount determined by dividing--

`(i) the qualified current retiree health liabilities o f the employer for such taxable year determined--

`(I) without regard to any reduction under subsecti on (e)(1)(B), and

`(II) in the case of a taxable year in which there was no qualified transfer, in the same manner as if there had been such a transf er, by

`(ii) the number of individuals to whom coverage for ap plicable health benefits was provided during such taxable year.

`(C) ELECTION TO COMPUTE COST SEPARATELY- An employer may e lect to have this paragraph applied separately with respect to individuals eligi ble for benefits under title XVIII of the Social Security Act at any time during the taxable year and with respect to individuals not so eligible.

`(D) BENEFIT MAINTENANCE PERIOD- For purposes of this parag raph, the term `benefit maintenance period' means the 5 taxable year period begi nning with the taxable year in which the qualified transfer occurs. If a taxable year is in 2 or more overlapping benefit maintenance periods, this paragraph sh all be applied by taking into account the highest applicable employer cost requi red to be provided under subparagraph (A) for such taxable year.
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`(d) LIMITATIONS ON EMPLOYER- For purposes of this title--

`(1) DEDUCTION LIMITATIONS- No deduction shall be allowed--

`(A) for the transfer of any amount to a health benefits ac count in a qualified transfer (or any retransfer to the plan under subsection (c )(1)(B)),

`(B) for qualified current retiree health liabilities paid out of the assets (and income) described in subsection (c)(1), or

`(C) for any amounts to which subparagraph (B) does not app ly and which are paid for qualified current retiree health liabilities for the t axable year to the extent such amounts are not greater than the excess (if any) of--

`(i) the amount determined under subparagraph (A) (and income allocable thereto), over

`(ii) the amount determined under subparagraph (B).

`(2) NO CONTRIBUTIONS ALLOWED- An employer may not contribute a fter December 31, 1990, any amount to a health benefits account or welfare benef it fund (as defined in section 419(e)(1)) with respect to qualified current reti ree health liabilities for which transferred assets are required to be used unde r subsection (c)(1).

`(e) DEFINITION AND SPECIAL RULES- For purposes of this section--

`(1) QUALIFIED CURRENT RETIREE HEALTH LIABILITIES- For purposes of this section--

`(A) IN GENERAL- The term `qualified current retiree health liabilities' means, with respect to any taxable year, the aggregate amounts (in cluding administrative expenses) which would have been allowable as a deduction to the employer for such taxable year with respect to applicable health benefits provided during such taxable year if--

`(i) such benefits were provided directly by the employ er, and

`(ii) the employer used the cash receipts and disbursem ents method of accounting.

For purposes of the preceding sentence, the rule of section 4 19(c)(3)(B) shall apply.

`(B) REDUCTIONS FOR AMOUNTS PREVIOUSLY SET ASIDE- The amoun t determined under subparagraph (A) shall be reduced by any amount previously co ntributed to a health benefits account or welfare benefit fund (as defined in se ction 419(e)(1)) to pay for the qualified current retiree health liabilities.

`(C) APPLICABLE HEALTH BENEFITS- The term `applicable healt h benefits' mean health benefits which are provided to--

`(i) former employees who, immediately before the quali fied transfer, are entitled to receive benefits through the account by reason of their participation under the plan, and

`(ii) their spouses and dependents.

`(D) KEY EMPLOYEES EXCLUDED- If an employee is a key employ ee (within the meaning of section 416(i)(1)) with respect to any plan year endin g in a taxable year, such employee shall not be taken into account in computing qualified current retiree health liabilities for such taxable year.

`(2) EXCESS PENSION ASSETS- The term `excess pension assets' me ans the excess (if any) of--

`(A) the amount determined under section 412(c)(7)(A)(ii), over

`(B) the greater of--

`(i) the amount determined under section 412(c)(7)(A)(i ), or

`(ii) 125 percent of current liability (as defined in s ection 412(c)(7)(B)).

The determination under this paragraph shall be made as of the mo st recent valuation date of the plan preceding the qualified transfer.

`(3) HEALTH BENEFITS ACCOUNT- The term `health benefits account ' means an account established and maintained under section 401(h).

`(4) COORDINATION WITH SECTION 412- In the case of a qualified transfer to a health benefits account--

`(A) any assets transferred in a plan year after the valuat ion date for such year shall, for purposes of section 412(c)(7), be treated as a ssets in the plan as of the valuation date for the following year, and

`(B) the plan shall be treated as having a net experience l oss under section 412(b)(2)(B)(iv) for the plan year in which such transfer occu rs in an amount equal to the amount of such transfer, except that such section s hall be applied to such amount by substituting `10 plan years' for `5 plan years '.'

(b) CONFORMING AMENDMENT- Section 401(h) of the Internal Revenue Co de of 1986 is amended by inserting `, and subject to the provisions of section 4 20' after `Secretary'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to transfers in taxable years beginning after December 31, 1990.

SEC. 10312. APPLICATION OF ERISA TO TRANSFERS OF EXCESS PENSION ASSET S TO RETIREE HEALTH ACCOUNTS.

(a) EXCLUSIVE BENEFIT REQUIREMENT- Section 403(c)(1) of the Employe e Retirement Income Security Act of 1974 (29 U.S.C. 1103(c)(1)) is amended by in serting `, or under section 420 of the Internal Revenue Code of 1986 (as in effe ct on January 1, 1991)' after `insured plans)'.

(b) FIDUCIARY DUTIES- Section 404(a)(1) of such Act (29 U.S.C. 1104 (a)(1)) is amended by inserting `and subject to section 420 of the Internal Reve nue Code of 1986 (as in effect on January 1, 1991),' after `4044,'.

(c) EXEMPTIONS FROM PROHIBITED TRANSACTIONS- Section 408(b) of such Act (29 U.S.C. 1108(b)) is amended by adding at the end the following new parag raph:

`(13) Any transfer in a taxable year beginning before January 1 , 1996, of excess pension assets from a defined benefit plan to a retiree health account in a qualified transfer permitted under section 420 of the Internal Rev enue Code of 1986 (as in effect on January 1, 1991).'

(d) FUNDING LIMITATIONS- Section 302 of such Act (29 U.S.C. 1082) i s amended by redesignating subsection (g) as subsection (h) and by adding at the end the following new subsection:

`(g) QUALIFIED TRANSFERS TO HEALTH BENEFIT ACCOUNTS- For purposes o f this section, in the case of a qualified transfer (as defined in section 420 o f the Internal Revenue Code of 1986)--

`(1) any assets transferred in a plan year after the valuation date for such year shall, for purposes of subsection (c)(7), be treated as asset s in the plan as of the valuation date for the following year, and

`(2) the plan shall be treated as having a net experience loss under subsection (b)(2)(B)(iv) for the plan year in which such transfer occurs i n an amount equal to the amount of such transfer, except that such subsection sh all be applied to such amount by substituting `10 plan years' for `5 plan years' .'

(e) NOTICE REQUIREMENTS-

(1) IN GENERAL- Section 101 of such Act (29 U.S.C. 1021) is ame nded by redesignating subsection (e) as subsection (f) and by inserting after su bsection (d) the following new subsection:

`(e) Notice of Transfer of Excess Pension Assets to Health Benefits Accounts-

`(1) NOTICE TO PARTICIPANTS- Not later than 60 days before the date of a qualified transfer by an employee pension benefit plan of excess pensi on assets to a health benefits account, the administrator of the plan shall noti fy (in such manner as the Secretary may prescribe) each participant and benefici ary under the plan of such transfer. Such notice shall include information with respect to the amount of excess pension assets, the portion to be transferred, t he amount of health benefits liabilities to be funded with the assets transferre d, and the amount of pension benefits of the participant which will be vested im mediately after the transfer.

`(2) Notice to secretaries, administrator, and employee organiz ations-

`(A) IN GENERAL- Not later than 60 days before the date of any qualified transfer by an employee pension benefit plan of excess pension ass ets to a health benefits account, the employer maintaining the plan from which t he transfer is made shall provide the Secretary, the Secretary of the Treasury, the administrator, and each employee organization representing participants in t he plan a written notice of such transfer. A copy of any such notice shall be av ailable for inspection in the principal office of the administrator.

`(B) INFORMATION RELATING TO TRANSFER- Such notice shall id entify the plan from which the transfer is made, the amount of the transfer, a d etailed accounting of assets projected to be held by the plan immediately before and immediately after the transfer, and the current liabilities under the plan at the time of the transfer.

`(C) AUTHORITY FOR ADDITIONAL REPORTING REQUIREMENTS- The S ecretary may prescribe such additional reporting requirements as may be necessar y to carry out the purposes of this section.

`(3) DEFINITIONS- For purposes of paragraph (1), any term used in such paragraph which is also used in section 420 of the Internal Revenue Code of 1986 shall have the same meaning as when used in such section.'

(2) PENALTIES-

(A) Section 502(c)(1) of such Act (29 U.S.C. 1132(c)(1)) is amended by inserting `or section 101(e)(1)' after `section 606'.

(B) Section 502(c)(3) of such Act (29 U.S.C. 1132(c)(3)) is amended--

(i) by inserting `or who fails to meet the requirements of section 101(e)(2) with respect to any person' after `beneficiary' the first place it appears, and

(ii) by inserting `or to such person' after `beneficiar y' the second place it appears.

(f) EFFECTIVE DATE- The amendments made by this section shall apply to qualified transfers under section 420 of the Internal Revenue Code of 1986 m ade after the date of the enactment of this Act.

PART 3--PREMIUM RATES

SEC. 10321. INCREASE IN PREMIUM RATES.

(a) INCREASE IN BASIC PREMIUM-

(1) IN GENERAL- Clause (i) of section 4006(a)(3)(A) of the Empl oyee Retirement Income Security Act of 1974 (29 U.S.C. 1306(a)(3)(A)) is amended by striking `for plan years beginning after December 31, 1987, an amount equal to the sum of $16' and inserting `for plan years beginning after December 31, 19 90, an amount equal to the sum of $19'.

(2) CONFORMING AMENDMENT- Section 4006(c)(1)(A) of such Act (29 U.S.C. 1306(c)(1)(A)) is amended by adding at the end the following new clause:

`(iv) with respect to each plan year beginning after De cember 31, 1987, and before January 1, 1991, an amount equal to $16 for each ind ividual who was a participant in such plan during the plan year, and'.

(b) INCREASE IN ADDITIONAL PREMIUM- Section 4006(a)(3)(E) of such A ct (29 U.S.C. 1306(a)(3)(E)) is amended--

(1) by striking `$6.00' in clause (ii) and inserting `$9.00', a nd

(2) by striking `$34' in clause (iv)(I) and inserting `$53'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to plan years beginning after December 31, 1990.

TITLE XI--VETERANS

TABLE OF CONTENTS

Subtitle A--Compensation and Pension

Sec. 11001. Compensation benefits for incompetent veterans having estates.

Sec. 11002. Elimination of presumption of total disability in det ermination of pension for certain veterans.

Sec. 11003. Reduction in pension for veterans receiving Medicaid- covered nursing home care.

Sec. 11004. Ineligibility of remarried surviving spouses for rein statement of dependency and indemnity compensation upon becoming single.

Sec. 11005. Policy regarding cost-of-living increases in compensa tion rates.

Subtitle B--Health Care

Sec. 11011. Medical-care cost recovery.

Sec. 11012. Copayment for medication.

Sec. 11013. Modification of health-care categories and copayments .

Subtitle C--Educational and Vocational Assistance

Sec. 11021. Interterm reduction of educational assistance.

Sec. 11022. Elimination of vocational rehabilitation benefits for certain disabled veterans.

Subtitle D--Home Loan Guaranties

Sec. 11031. Election of claim under guaranty of manufactured home loans.

Sec. 11032. Increase in certain loan fees.

Subtitle E--Burial Benefits and Grave Markers

Sec. 11041. Eligibility for burial plot allowance.

Sec. 11042. Elimination of headstone allowance.

Subtitle F--Miscellaneous

Sec. 11051. Use of Internal Revenue Service and Social Security A dministration data for income verification.

Sec. 11052. Line of duty.

Sec. 11053. Reporting of social security numbers by claimants and uses of death information by the Department of Veterans Affairs.

Subtitle A--Compensation and Pension

SEC. 11001. COMPENSATION BENEFITS FOR INCOMPETENT VETERANS HAVING EST ATES.

(a) IN GENERAL- Section 3203 of title 38, United States Code, is am ended--

(1) by redesignating subsections (d) and (e) as subsections (e) and (f), respectively; and

(2) by inserting after subsection (c), the following new subsec tion (d):

`(d)(1) In any case in which a veteran having neither spouse, child , nor dependent parent is rated by the Secretary in accordance with regulations as being incompetent and the value of the veteran's estate exceeds $25,000, furt her payment of compensation to which the veteran would otherwise be entitled may not be made until the value of such estate is reduced to less than $10,000.

`(2)(A) Subject to subparagraph (B) of this paragraph, if a veteran denied payment of compensation pursuant to paragraph (1) of this subsection is subsequently rated as being competent, the Secretary shall pay to the veteran a lump sum equal to the total of the compensation which was denied the veteran pur suant to such paragraph. The Secretary shall make the lump-sum payment after the end of 90 days following the date of the competency rating.

`(B) A lump-sum payment shall not be made under this paragraph to a veteran who, within such 90-day period, dies or is again rated by the Secretary as being incompetent.

`(3) The costs of administering this subsection shall be paid for f rom amounts available to the Department of Veterans Affairs for the payment of c ompensation and pension.

`(4) For the purposes of this subsection, the term `veteran's estat e' means the market value (exclusive of the value of any mortgages or encumbranc es) of all real and personal property owned by a veteran other than a principal residence and other personal effects suitable to, and consistent with, such vete ran's reasonable mode of living, as determined by the Secretary.'.

(b) EFFECTIVE DATE- The amendment made by this section shall apply with respect to payments of compensation for months after October 1990.

SEC. 11002. ELIMINATION OF PRESUMPTION OF TOTAL DISABILITY IN DETERMI NATION OF PENSION FOR CERTAIN VETERANS.

(a) ELIMINATION OF PRESUMPTION- Section 502(a) of title 38, United States Code, is amended by striking out `sixty-five years of age or older or'.

(b) APPLICABILITY- The amendment made by subsection (a) shall take effect with respect to veterans who, on November 1, 1990, are not receiving pens ion under laws administered by the Secretary of Veterans Affairs.

SEC. 11003. REDUCTION IN PENSION FOR VETERANS RECEIVING MEDICAID-COVE RED NURSING HOME CARE.

(a) IN GENERAL- Section 3203 of title 38, United States Code, as am ended by section 11001, is further amended by adding at the end the following:

`(g)(1) For the purposes of this subsection--

`(A) the term `Medicaid plan' means a State plan for medical as sistance referred to in section 1902(a) of the Social Security Act (42 U.S.C. 13 96a(a)); and

`(B) the term `nursing facility' means a nursing facility descr ibed in section 1919 of such Act (42 U.S.C. 1396r).

`(2) If a veteran having neither spouse nor child is covered by a M edicaid plan for services furnished such veteran by a nursing facility, no pensi on in excess of $90 per month shall be paid to or for the veteran for any period after the month of admission to such nursing facility.

`(3) Notwithstanding any provision of title XIX of the Social Secur ity Act, the amount of the payment paid a nursing facility pursuant to a Medicai d plan for services furnished a veteran may not be reduced by any amount of pens ion permitted to be paid such veteran under paragraph (2) of this subsection.

`(4) A veteran is not liable to the United States for any payment o f pension in excess of the amount permitted under this subsection that is paid t o or for the veteran by reason of the inability or failure of the Secretary to r educe the veteran's pension under this subsection unless such inability or failu re is the result of a willful concealment by the veteran of information necessar y to make a reduction in pension under this subsection.

`(5) The costs of administering this subsection shall be paid for f rom amounts available to the Department of Veterans Affairs for the payment of c ompensation and pension.'.

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall take effect on November 1, 1990.

SEC. 11004. INELIGIBILITY OF REMARRIED SURVIVING SPOUSES FOR REINSTAT EMENT OF DEPENDENCY AND INDEMNITY COMPENSATION UPON BECOMING SINGLE.

(a) IN GENERAL- Section 103(d) of title 38, United States Code, is amended--

(1) in paragraph (2), by inserting `(other than dependency and indemnity compensation or pension)' after `benefits'; and

(2) in paragraph (3), by striking out `shall not apply' and ins erting in lieu thereof `shall apply only to dependency and indemnity compensatio n and to pension'.

(b) EFFECTIVE DATE- The amendments made by subsection (a) shall app ly to persons remarrying after October 30, 1990.

SEC. 11005. POLICY REGARDING COST-OF-LIVING INCREASES IN COMPENSATION RATES.

(a) POLICY- The fiscal year 1991 cost-of-living adjustments in the rates of compensation payable under chapter 11 of title 38, United States Code, and of the dependency and indemnity compensation payable under chapter 13 of suc h title will be no more than a 4.5-percent increase, all increases will be round ed down to the next lower dollar, and the increases for disabilities rated at 10 percent and at 20 percent shall be $1 less than the amount equal to a 4.5-perce nt increase.

(b) PROVISION NOT AUTHORITY TO INCREASE RATES- Subsection (a) shall not be construed to increase or to authorize the Secretary of Veterans Affairs to increase the rates of compensation and of dependency and indemnity compensati on referred to in such subsection.

Subtitle B--Health Care

SEC. 11011. MEDICAL-CARE COST RECOVERY.

(a) APPLICABILITY- Section 629(a)(2) of title 38, United States Cod e, is amended--

(1) by striking out `or' at the end of clause (C);

(2) by striking out the period at the end of clause (D) and ins erting in lieu thereof `; or'; and

(3) by adding at the end the following new clause:

`(E) for which care and services are furnished under this chapt er to a veteran who--

`(i) has a service-connected disability; and

`(ii) is entitled to care (or payment of the expenses of ca re) under a health-plan contract.'.

(b) MAXIMUM AMOUNT RECOVERABLE- Clause (B) of section 629(c)(2) of such title is amended by striking out `in accordance with the prevailing rates a t which the third party makes payments under comparable health-plan contracts wi th' and inserting in lieu thereof `if provided by'.

(c) ESTABLISHMENT OF MEDICAL-CARE COST RECOVERY FUND- Section 629(g ) of such title is amended to read as follows:

`(g)(1) There is established in the Treasury a fund to be known as the Department of Veterans Affairs Medical-Care Cost Recovery Fund (hereafter re ferred to in this section as the `Fund').

`(2) Amounts recovered or collected under this section shall be cre dited to the Fund.

`(3) Sums in the Fund shall be available to the Secretary for the f ollowing:

`(A) Payment of necessary expenses for the identification, bill ing, and collection of the cost of care and services furnished under this chapte r, including--

`(i) the costs of computer hardware and software, word proc essing and telecommunications equipment, other equipment, supplies, and furnitur e;

`(ii) personnel training and travel costs;

`(iii) personnel and administrative costs for attorneys in the Office of General Counsel of the Department and for support personnel of suc h office;

`(iv) other personnel and administrative costs; and

`(v) the costs of any contract for identification, billing, or collection services.

`(B) Payment of the Secretary for reasonable charges, as determ ined by the Secretary, imposed for (i) services and utilities (including light, water, and heat) furnished by the Secretary, (ii) recovery and collection activi ties under this section, and (iii) administration of the Fund.

`(C) Payment of costs related to the administration and collect ion of payments required under section 610(f) of this title for hospital care or nursing home care, under section 612(f) of this title for medical services, and under section 622A of this title for medications.

`(4) Not later than January 1 of each year, there shall be deposite d into the Treasury as miscellaneous receipts an amount equal to the amount of t he unobligated balance remaining in the Fund at the close of business on Septemb er 30 of the preceding year minus any part of such balance that the Secretary of Veterans Affairs determines is necessary to defray, during the fiscal year in w hich the deposit is made, the expenses, payments, and costs described in paragra ph (3).'.

(d) TRANSFER TO FUND-

(1) AMOUNT TO BE TRANSFERRED- The Secretary of the Treasury sha ll transfer $25,000,000 from the Department of Veterans Affairs Loan Guaranty Re volving Fund to the Department of Veterans Affairs Medical-Care Cost Recovery Fu nd established by section 629(g) of title 38, United States Code (as amended by subsection (c)). The amount so transferred shall be available until the end of S eptember 30, 1991, for the support of the equivalent of 800 full-time employees and other expenses described in paragraph (3) of such section.

(2) REIMBURSEMENT OF LOAN GUARANTY REVOLVING FUND- Notwithstand ing section 629(g) of title 38, United States Code (as amended by subsection (c) ), the first $25,000,000 recovered or collected by the Department of Veterans Af fairs during fiscal year 1991 as a result of third-party medical recovery activi ties shall be credited to the Department of Veterans Affairs Loan Guaranty Revol ving Fund.

(3) THIRD-PARTY MEDICAL RECOVERY ACTIVITIES DEFINED- For the pu rposes of this subsection, the term `third-party medical recovery activities' me ans recovery and collection activities carried out under section 629 of title 38 , United States Code.

(e) EFFECTIVE DATE- The amendments made by this section shall take effect as of October 1, 1990.

SEC. 11012. COPAYMENT FOR MEDICATION.

(a) COPAYMENT REQUIRED-

(1) IN GENERAL- Subchapter III of chapter 17 of title 38, Unite d States Code, is amended by inserting after section 622 the following new secti on:

` 622A. Copayment for medication

`(a) The Secretary shall require a veteran (other than a veteran wi th a service-connected disability rated 50 percent or more) to pay the United St ates $2 for each 30-day supply of medication furnished such veteran under this c hapter on an outpatient basis for the treatment of a non-service-connected disab ility or condition. If the initial amount supplied is less than a 30-day supply, the amount of the charge may not be reduced.

`(b) Amounts collected under this section shall be credited to the Department of Veterans Affairs Medical-Care Cost Recovery Fund.'.

(2) CLERICAL AMENDMENT- The table of sections at the beginning of such chapter is amended by inserting after the item relating to section 622 t he following new item:

`622A. Copayment for medication.'.

(b) EFFECTIVE DATE- The amendments made by subsection (a) shall tak e effect with respect to medications furnished to a veteran after October 31, 19 90.

SEC. 11013. MODIFICATION OF HEALTH-CARE CATEGORIES AND COPAYMENTS.

(a) INPATIENT CARE- Section 610 of title 38, United States Code, is amended--

(1) in subsection (a)(1)(I), by striking out `622(a)(1)' and in serting in lieu thereof `622(a)';

(2) by amending paragraph (2) of subsection (a) to read as foll ows:

`(2) In the case of a veteran who is not described in paragraph (1) of this subsection, the Secretary may, to the extent resources and facilities a re available, furnish hospital care and nursing home care to a veteran which the Secretary determines is needed for a non-service-connected disability, subject to the provisions of subsection (f) of this section.';

(3) in subsection (f), by striking out paragraphs (1) and (2) a nd inserting in lieu thereof the following:

`(1) The Secretary may not furnish hospital care or nursing home ca re under this section to a veteran who is eligible for such care under subsectio n (a)(2) of this section unless the veteran agrees to pay to the United States t he applicable amount determined under paragraph (2) of this subsection.

`(2)(A) A veteran who is furnished hospital care or nursing home ca re under this section and who is required under paragraph (1) of this subsection to agree to pay an amount to the United States in order to be furnished such ca re shall be liable to the United States for an amount equal to the lesser of--

`(i) the cost of furnishing such care, as determined by the Secretary, or

`(ii) the amount equal to the sum of the amount determined under paragraph (3) of this subsection plus an amount equal to $10 for every day the veteran receives hospital care, and $5 for every day the veteran receives n ursing home care.

`(B) Effective on January 1 of each year, the amounts in effect und er clause of subparagraph (A) shall be increased by the percentage increase (if any) in the Consumer Price Index of all Urban Consumers (as published by the Bur eau of Labor Statistics of the Department of Labor) for the 12-month period endi ng on the previous November 30.'; and

(4) in subparagraphs (A) and (B) of subsection (f)(3), by strik ing out `(2)(B)' each place it appears and inserting in lieu thereof `(2)(A)(ii) '.

(b) OUTPATIENT CARE- Subsection (f) of section 612 of title 38, Uni ted States Code, is amended--

(1) in paragraph (1), by striking out `610(a)(2)(B)' and insert ing in lieu thereof `610(a)(2)';

(2) by striking out paragraphs (3), (4), and (6); and

(3) by redesignating paragraphs (5) and (7) as (3) and (4), res pectively.

(c) INCOME THRESHOLDS-

(1) IN GENERAL- Subsection (a) of section 622 of title 38, Unit ed States Code, is amended--

(A) in paragraph (1)--

(i) by striking out `(1)' at the beginning of the subse ction;

(ii) by redesignating clauses (A), (B), and (C) as para graphs (1), (2), and (3), respectively; and

(iii) by striking out `Category A threshold' in paragra ph (3), as so redesignated, and inserting in lieu thereof `applicable income thr eshold amount under subsection (b)'; and

(B) by striking out paragraph (2).

(2) CALENDAR YEAR 1990- Subsection (b) of such section is amend ed to read as follows:

`(b)(1) For purposes of subsection (a)(3), the income threshold amo unt for the calendar year beginning on January 1, 1990, is--

`(A) $17,240 in the case of a veteran with no dependents; and

`(B) $20,688 in the case of a veteran with one dependent, plus $1,150 for each additional dependent.

`(2) For a calendar year beginning after December 31, 1990, the amo unts in effect for purposes of this subsection shall be the amounts in effect fo r the preceding calendar year as adjusted under subsection (c) of this section.' .

(3) TECHNICAL AMENDMENT- Subsection (c) of such section is amen ded by striking out `paragraphs (1) and (2) of'.

(4) ABILITY DETERMINATION- Paragraph (2) of subsection (d) of s uch section is amended to read as follows:

`(2) A determination described in this paragraph is a determination that, for purposes of subsection (a)(3) of this section, a veteran's attributab le income is not greater than the amount determined under subsection (b) of this section.'.

(5) HARDSHIP- Subsection (e) of such section is amended--< /ul>

(A) in paragraph (1), by striking out `the Category A thres hold or the Category B threshold, as appropriate' and inserting in lieu thereof `the applicable income threshold amount under subsection (b) of this section'; a nd

(B) by striking out paragraph (2) and inserting in lieu the reof the following:

`(2) A veteran is described in this paragraph for the purposes of s ubsection (a) of this section if--

`(A) the veteran has an attributable income greater than the ap plicable income threshold amount under subsection (b) of this section; and< /ul>

`(B) the current projections of such veteran's income for the c urrent year are that the veteran's income for such year will be substantially be low the applicable income threshold amount under subsection (b).'.

(d) EFFECTIVE DATE- The amendments made by this section shall apply with respect to hospital care and medical services received after October 31, 1 990.

Subtitle C--Educational and Vocational Assistance

SEC. 11021. INTERTERM REDUCTION OF EDUCATIONAL ASSISTANCE.

(a) ALL VOLUNTEER FORCE EDUCATIONAL ASSISTANCE PROGRAM-

(1) BASIC EDUCATIONAL ASSISTANCE-

(A) IN GENERAL- Section 1415 of title 38, United States Cod e, is amended by adding at the end the following new subsection:
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`(e)(1) Except as provided in paragraph (2) of this subsection, the amount of monthly basic educational assistance payable under this subchapter to an individual for a period described in clause (B) or (C) of section 1780(a) of this title shall be reduced to 1/3 of the last rate of such monthly assistanc e paid or payable to the individual for the semester, quarter, or other academic term immediately preceding the period. In no event, however, shall an individua l be paid educational assistance for any such period if the individual was enrol led on a less than half-time basis at the end of the semester, quarter, or other term immediately preceding the period.

`(2) A reduction is not required under paragraph (1) of this subsec tion for any period of less than 7 days.

`(3) In the computation of the amount of the basic educational assi stance under paragraph (1) of this subsection, any fraction of a dollar equal to 50. or more shall be rounded to the next higher dollar, and any fraction of a d ollar less than 50. shall be rounded to the next lower dollar.'.

(B) TECHNICAL AMENDMENT- Subsection (a) of such section is amended by striking out `subsections (b) and (c)' and inserting in lieu thereof `subsections (b), (c), (d), and (e)'.

(2) SUPPLEMENTAL EDUCATIONAL ASSISTANCE- Section 1422 of such t itle is amended by adding at the end the following new subsection:

`(c)(1) Except as provided in paragraph (2) of this subsection, the amount of monthly supplemental educational assistance payable under this subcha pter to an individual for a period described in clause (B) or (C) of section 178 0(a) of this title shall be reduced to 1/3 of the last rate of such monthly as sistance paid or payable to the individual for the semester, quarter, or other a cademic term immediately preceding the period. In no event, however, shall an in dividual be paid supplemental educational assistance for any such period if the individual was enrolled on a less than half-time basis at the end of the semeste r, quarter, or other term immediately preceding the period.

`(2) A reduction is not required under paragraph (1) of this subsec tion for any period of less than 7 days.

`(3) In the computation of the amount of the supplemental education al assistance under paragraph (1) of this subsection, any fraction of a dollar e qual to 50. or more shall be rounded to the next higher dollar, and any fraction of a dollar less than 50. shall be rounded to the next lower dollar.'.

(b) POST-VIETNAM ERA VETERANS' EDUCATIONAL ASSISTANCE- Section 1631 of title 38, United States Code, is amended by adding at the end the following new subsection:

`(f)(1) Except as provided in paragraph (2) of this subsection, the amount of monthly benefit payable under this chapter to an individual for a per iod described in clause (B) or (C) of section 1780(a) of this title shall be red uced to 1/3 of the last rate of such monthly benefit paid or payable to the in dividual for the semester, quarter, or other academic term immediately preceding the period. In no event, however, shall an individual be paid such benefit for any such period if the individual was enrolled on a less than half-time basis at the end of the semester, quarter, or other term immediately preceding the perio d.

`(2) A reduction is not required under paragraph (1) of this subsec tion for any period of less than 7 days.

`(3) In the computation of the amount of the monthly benefit paymen t under paragraph (1) of this subsection, any fraction of a dollar equal to 50. or more shall be rounded to the next higher dollar, and any fraction of a dollar less than 50. shall be rounded to the next lower dollar.'.

(c) SURVIVORS' AND DEPENDENTS' EDUCATIONAL ASSISTANCE- Section 1732 of title 38, United States Code, is amended by adding at the end the following new subsection:

`(f)(1) Except as provided in paragraph (2) of this subsection, the amount of the monthly educational assistance allowance payable under this chapt er to an individual for a period described in clause (B) or (C) of section 1780( a) of this title shall be reduced to 1/3 of the last rate of such monthly assi stance allowance paid or payable to the individual for the semester, quarter, or other academic term immediately preceding the period. In no event, however, sha ll an individual be paid an educational assistance allowance for any such period if the individual was enrolled on a less than half-time basis at the end of the semester, quarter, or other term immediately preceding the period.

`(2) A reduction is not required under paragraph (1) of this subsec tion for any period of less than 7 days.

`(3) In the computation of the amount of the educational assistance allowance under paragraph (1) of this subsection, any fraction of a dollar equa l to 50. or more shall be rounded to the next higher dollar, and any fraction of a dollar less than 50. shall be rounded to the next lower dollar.'.

(d) EDUCATIONAL ASSISTANCE FOR MEMBERS OF THE SELECTED RESERVE- Sec tion 2131 of title 10, United States Code, is amended by adding at the end the f ollowing new subsection:

`(h)(1) Except as provided in paragraph (2) of this subsection, the amount of the monthly educational assistance allowance payable under this chapt er to an individual for a period described in clause (B) or (C) of section 1780( a) of title 38 shall be reduced to 1/3 of the last rate of such monthly assist ance allowance paid or payable to the individual for the semester, quarter, or o ther academic term immediately preceding the period. In no event, however, shall an individual be paid an educational assistance allowance for any such period i f the individual was enrolled on a less than half-time basis at the end of the s emester, quarter, or other term immediately preceding the period.

`(2) A reduction is not required under paragraph (1) of this subsec tion for any period of less than 7 days.

`(3) In the computation of the amount of the educational assistance allowance under paragraph (1) of this subsection, any fraction of a dollar equa l to 50. or more shall be rounded to the next higher dollar, and any fraction of a dollar less than 50. shall be rounded to the next lower dollar.'.

(e) ADMINISTRATIVE COSTS- The costs of administering sections 1415( e), 1422(c), 1631(f), and 1732(f) of title 38, United States Code (as added by t his section), and section 2131(h) of title 10, United States Code (as added by t his section), shall be paid for from amounts available to the Department of Vete rans Affairs for the payment of readjustment benefits.

SEC. 11022. ELIMINATION OF VOCATIONAL REHABILITATION BENEFITS FOR CER TAIN DISABLED VETERANS.

(a) IN GENERAL- Section 1502(1)(A) of title 38, United States Code, is amended by inserting `at a rate of 30 percent or more' after `compensable' b oth places it appears.

(b) SAVINGS PROVISION- In the case of any person who is participati ng in a rehabilitation program under chapter 31 of title 38, United States Code, on the date of the enactment of this Act, the amendment made by subsection (a) shall not affect the eligibility of such person to continue to participate in su ch program for so long as there is no break in such person's participation in su ch program after such date.

Subtitle D--Home Loan Guaranties

SEC. 11031. ELECTION OF CLAIM UNDER GUARANTY OF MANUFACTURED HOME LOA NS.

(a) IN GENERAL- Paragraph (3) of section 1812(c) of title 38, Unite d States Code, is amended to read as follows:

`(3)(A) The Secretary's guaranty may not exceed the lesser of (i) t he lesser of $20,000 or 40 percent of the loan, or (ii) the maximum amount of th e guaranty entitlement available to the veteran as specified in paragraph (4) of this subsection.

`(B) A claim under the Secretary's guaranty shall, at the election of the holder of a loan, be made--

`(i) by application to the Secretary within a reasonable time a fter the receipt by such holder of an appraisal by the Secretary of the value of the security for the loan; or

`(ii) after liquidation of the security for the loan, by the fi ling of an accounting with the Secretary.

`(C) If the holder of a loan applies for payment of a claim under c lause (i) of subparagraph (B) of this paragraph, the amount of such claim payabl e by the Secretary shall be the lesser of--

`(i) the amount equal to the excess, if any, of the loan balanc e over the value of the appraisal referred to in such subclause; or

`(ii) the amount equal to the excess, if any, of the amount of the guaranty over the value of such appraisal.

`(D) If the holder of a loan files for payment of a claim under cla use (ii) of subparagraph (B) this paragraph, the amount of such claim payable by the Secretary shall be the lesser of--

`(i) the amount equal to the excess, if any, of the loan balanc e over the amount of the liquidation or loan proceeds; or

`(ii) the amount equal to the excess, if any, of the amount of the guaranty over the amount of the liquidation or resale proceeds.

`(E) In any accounting filed pursuant to subparagraph (B)(ii) of th is subsection, the Secretary shall permit to be included therein accrued unpaid interest from the date of the first uncured default to such cutoff date as the S ecretary may establish, and the Secretary shall allow the holder of the loan to charge against the liquidation or resale proceeds accrued interest from the cuto ff date established to such further date as the Secretary may determine and such costs and expenses as the Secretary determines to be reasonable and proper.

`(F) The liability of the United States under the guaranty provided for by this paragraph shall decrease or increase pro rata with any decrease or increase of the amount of the unpaid portion of the obligation.'.

(b) EFFECTIVE DATE- The amendment made by this section shall apply to claims filed with the Secretary of Veterans Affairs on or after the date of t he enactment of this Act.

SEC. 11032. INCREASE IN CERTAIN LOAN FEES.

(a) INCREASED FEE PERCENTAGES- Section 1829(b)(1) of title 38, Unit ed States Code, is amended--

(1) in the matter above clause (A), by striking out `1.25 perce nt' and inserting in lieu thereof `2 percent';

(2) in clause (B), by striking out `0.75 percent' and inserting in lieu thereof `1.5 percent'; and

(3) in clause (C), by striking out `0.50 percent' and inserting in lieu thereof `1.25 percent'.

(b) EFFECTIVE DATE- The amendments made by subsection (a) shall tak e effect with respect to housing loans guaranteed, insured, or made under chapte r 37 of title 38, United States Code, on or after the date of the enactment of t his Act.

Subtitle E--Burial Benefits and Grave Markers

SEC. 11041. ELIGIBILITY FOR BURIAL PLOT ALLOWANCE.

(a) IN GENERAL- Section 903 of title 38, United States Code, is ame nded by adding at the end the following new subsection:

`(c) The Secretary may not pay a plot or interment allowance under clause (2) of subsection (b) for any veteran whose eligibility for such allowanc e is based on such veteran's status as a veteran of any war.'.

(b) EFFECTIVE DATE- Subsection (c) of section 903 of title 38, Unit ed States Code (as added by subsection (a)), shall take effect with respect to d eaths occurring after October 30, 1990.

SEC. 11042. ELIMINATION OF HEADSTONE ALLOWANCE.

(a) IN GENERAL- Section 906 of title 38, United States Code, is ame nded--

(1) by striking out subsection (d); and

(2) by redesignating subsection (e) as subsection (d).

(b) EFFECTIVE DATE- The amendments made by subsection (a) shall tak e effect with respect to deaths occurring after October 30, 1990.

Subtitle F--Miscellaneous

SEC. 11051. USE OF INTERNAL REVENUE SERVICE AND SOCIAL SECURITY ADMIN ISTRATION DATA FOR INCOME VERIFICATION.

(a) DISCLOSURE OF TAX INFORMATION-

(1) IN GENERAL- Subparagraph (D) of section 6103(l)(7) of the I nternal Revenue Code of 1986 (relating to disclosure of return information to Fe deral, State, and local agencies administering certain programs) is amended--

(A) by striking out `and' at the end of clause (vi);

(B) by striking out the period at the end of clause (vii) a nd inserting in lieu thereof `; and'; and

(C) by adding at the end the following new clause:

`(viii)(I) any needs-based pension provided under chapter 1 5 of title 38, United States Code, or any other law administered by the Secretar y of Veterans Affairs;

`(II) parents' dependency and indemnity compensation provid ed under section 415 of title 38, United States Code;

`(III) health-care services furnished under section 610(a)( 1)(I), 610(a)(2), 610(b), and 612(a)(2)(B) of such title; and

`(IV) compensation pursuant to a rating of total disability awarded by reason of inability to secure or follow a substantially gainful occu pation as a result of a service-connected disability, or service-connected disab ilities, not rated as total (except that, in such cases, only wage and self-empl oyment information may be disclosed).'.

(2) CLERICAL AMENDMENT- The heading of paragraph (7) of section 6103(l) of such Code is amended by striking out `OR THE FOOD STAMP ACT OF 1977' and inserting in lieu thereof `, THE FOOD STAMP ACT OF 1977, OR TITLE 38, UNITE D STATES CODE'.

(b) USE OF INCOME INFORMATION FOR NEEDS-BASED PROGRAMS-

(1) USE FOR NEEDS-BASED PROGRAMS- Chapter 53 of title 38, Unite d States Code, is amended by adding at the end the following new section:

` 3117. Use of income information from other agencies: notice and ver ification

`(a) The Secretary shall notify each applicant for a benefit or ser vice described in subsection (c) of this section that income information furnish ed by the applicant to the Secretary may be compared with information obtained b y the Secretary from the Secretary of Health and Human Services or the Secretary of the Treasury under section 6103(l)(7)(D)(viii) of the Internal Revenue Code of 1986. The Secretary shall periodically transmit to recipients of such benefi ts and services additional notifications of such matters.

`(b) The Secretary may not, by reason of information obtained from the Secretary of Health and Human Services or the Secretary of the Treasury unde r section 6103(l)(7)(D)(viii) of the Internal Revenue Code of 1986, terminate, d eny, suspend, or reduce any benefit or service described in subsection (c) of th is section until the Secretary takes appropriate steps to verify independently i nformation relating to the following:

`(1) The amount of the asset or income involved.

`(2) Whether such individual actually has (or had) access to su ch asset or income for the individual's own use.

`(3) The period or periods when the individual actually had suc h asset or income.

`(c) The benefits and services described in this subsection are the following:

`(1) Needs-based pension benefits provided under chapter 15 of this title or any other law administered by the Secretary.

`(2) Parents' dependency and indemnity compensation provided un der section 415 of this title.

`(3) Health-care services furnished under sections 610(a)(1)(I) , 610(a)(2), 610(b), and 612(a)(2)(B) of this title.

`(4) Compensation pursuant to a rating of total disability awar ded by reason of inability to secure or follow a substantially gainful occupatio n as a result of a service-connected disability, or service-connected disabiliti es, not rated as total.

`(d) In the case of compensation described in subsection (c)(4) of this section, the Secretary may independently verify or otherwise act upon wage or self-employment information referred to in subsection (b) of this section onl y if the Secretary finds that the amount and duration of the earnings reported i n that information clearly indicate that the individual may no longer be qualifi ed for a rating of total disability.

`(e) The Secretary shall inform the individual of the findings made by the Secretary on the basis of verified information under subsection (b) of t his section, and shall give the individual an opportunity to contest such findin gs, in the same manner as applies to other information and findings relating to eligibility for the benefit or service involved.

`(f) The Secretary shall pay the expenses of carrying out this sect ion from amounts available to the Department for the payment of compensation and pension.'.

(2) CLERICAL AMENDMENT- The table of sections at the beginning of such chapter is amended by adding at the end the following new item:

`3117. Use of income information from other agencies: notice and verification.'.

(c) NOTICE TO CURRENT BENEFICIARIES-

(1) IN GENERAL- The Secretary of Veterans Affairs shall notify individuals who (as of the date of the enactment of this Act) are applicants for or recipients of the benefits described in subsection (c) (other than paragraph (3)) of section 3117 of title 38, United States Code (as added by subsection (b )), that income information furnished to the Secretary by such applicants and re cipients may be compared with information obtained by the Secretary from the Sec retary of Health and Human Services or the Secretary of the Treasury under claus e (viii) of section 6103(l)(7)(D) of the Internal Revenue Code of 1986 (as added by subsection (a)).

(2) DEADLINE FOR NOTICE- Notification under paragraph (1) shall be made not later than 90 days after the date of the enactment of this Act.

(3) LIMITATION UNTIL NOTICE MADE- The Secretary of Veterans Aff airs may not obtain information from the Secretary of Health and Human Services or the Secretary of the Treasury under section 6103(l)(7)(D)(viii) of the Intern al Revenue Code of 1986 (as added by subsection (a)) until notification under pa ragraph (1) is made.

SEC. 11052. LINE OF DUTY.

(a) ELIMINATION OF COMPENSATION FOR SECONDARY EFFECTS OF MISCONDUCT - Title 38, United States Code, is amended--

(1) in section 105(a), by striking out `the result of the perso n's own willful misconduct' in the first sentence and inserting in lieu thereof `a result of the person's own willful misconduct or abuse of alcohol or drugs';

(2) in section 310, by striking out `the result of the veteran' s own willful misconduct' and inserting in lieu thereof `a result of the veteran 's own willful misconduct or abuse of alcohol or drugs'; and

(3) in section 331, by striking out `the result of the veteran' s own willful misconduct' and inserting in lieu thereof `a result of the veteran 's own willful misconduct or abuse of alcohol or drugs'.

(b) EFFECTIVE DATE- The amendments made by subsection (a) shall tak e effect with respect to line of duty determinations made on or after November 1 , 1990.

SEC. 11053. REPORTING OF SOCIAL SECURITY NUMBERS BY CLAIMANTS AND USE S OF DEATH INFORMATION BY THE DEPARTMENT OF VETERANS AFFAIRS.

(a) MANDATORY REPORTING OF SOCIAL SECURITY NUMBERS- Section 3001 of title 38, United States Code, is amended by adding at the end the following new subsection:

`(c)(1) Any person who applies for or is in receipt of any compensa tion or pension benefit under laws administered by the Secretary shall, if reque sted by the Secretary, furnish the Secretary with the social security number of such person and the social security number of any dependent or beneficiary on wh ose behalf, or based upon whom, such person applies for or is in receipt of such benefit. A person is not required to furnish the Secretary with a social securi ty number for any person to whom a social security number has not been assigned.

`(2) The Secretary shall deny the application of or terminate the p ayment of compensation or pension to a person who fails to furnish the Secretary with a social security number required to be furnished pursuant to paragraph (1 ) of this subsection. The Secretary may thereafter reconsider the application or reinstate payment of compensation or pension, as the case may be, if such perso n furnishes the Secretary with such social security number.

`(3) The costs of administering this subsection shall be paid for f rom amounts available to the Department of Veterans Affairs for the payment of c ompensation and pension.'.

(b) REVIEW OF DEPARTMENT OF HEALTH AND HUMAN SERVICES DEATH INFORMA TION TO IDENTIFY DECEASED RECIPIENTS OF COMPENSATION AND PENSION BENEFITS-

(1) IN GENERAL- Chapter 53 of title 38, United States Code, as amended by section 11051(b), is further amended by adding at the end the followi ng new section:

` 3118. Review of Department of Health and Human Services death infor mation

`(a) The Secretary shall periodically compare Department of Veteran s Affairs information regarding persons to or for whom compensation or pension i s being paid with Department of Health and Human Services death information for the purposes of--

`(1) determining whether any such persons are deceased;

`(2) ensuring that such payments to or for any such persons who are deceased are terminated in a timely manner; and

`(3) ensuring that collection of overpayments of such benefits resulting from payments after the death of such persons is initiated in a timely manner.

`(b) The Department of Health and Human Services death information referred to in subsection (a) of this section is death information available to the Secretary from or through the Secretary of Health and Human Services, includ ing death information available to the Secretary of Health and Human Services fr om a State, pursuant to a memorandum of understanding entered into by such Secre taries.'.

(2) CLERICAL AMENDMENT- The table of sections at the beginning of such chapter, as amended by section 11051(b), is further amended by adding at the end the following:

`3118. Review of Department of Health and Human Services death in formation.'.

TITLE XII--BUDGET PROCESS REFORM ACT OF 1990

SEC. 12001. SHORT TITLE.

This title may be cited as the `Budget Process Reform Act of 1990'.

SEC. 12002. TABLE OF CONTENTS.

TITLE XII--BUDGET PROCESS REFORM ACT OF 1990

Sec. 12001. Short title.

Sec. 12002. Table of contents.

Subtitle A--Deficit Reduction

Sec. 12051. Deficit targets.

Sec. 12052. Discretionary spending limits.

Sec. 12053. Sequester of defense, domestic discretionary, and int ernational discretionary accounts.

Sec. 12054. Restoration of funds sequestered.

Sec. 12055. Conforming changes.

Subtitle B--Pay-As-You-Go

Sec. 12101. Pay-as-you-go provisions in budget resolutions.< /ul>

Sec. 12102. Pay-as-you-go sequestration.

Subtitle C--Social Security Trust Fund

Sec. 12151. Exclusion of Social Security trust funds when calcula ting maximum deficit amounts.

Sec. 12152. Social Security firewall and point of order.

Subtitle D--Multiyear Budgeting to Ensure Permanent Savings

Sec. 12201. Multiyear budgeting.

Sec. 12202. President's budget to address out-years.

Sec. 12203. Strengthening the prohibition of spending before budg eting.

Subtitle E--Credit Reform

Sec. 12251. Credit reforms.

Sec. 12252. Effect on Congressional Budget Act and conforming ame ndments.

Sec. 12253. Table of contents.

Subtitle F--Budget Timetable

Sec. 12301. Budget timetable.

Subtitle G--Early Initial Gramm-Rudman-Hollings Reports

Sec. 12351. Early initial Gramm-Rudman-Hollings reports.

Sec. 12352. President's budget request to use Gramm-Rudman-Hollin gs rules.

Subtitle H--Strengthening the Byrd Rule on Extraneous Matter in Recon ciliation

Sec. 12401. Strengthening the Byrd rule.

Subtitle I--Budget Submissions by New Presidents

Sec. 12451. Requirement for new President's budgets.

Sec. 12452. Deadlines in years when a new President takes office.

Subtitle J--Repeal of Superseded Deadlines

Sec. 12501. Superseded deadlines and conforming changes.

Subtitle K--Standardization of Points of Order

Sec. 12551. Standardization of language regarding points of order .

Sec. 12552. Definitions.

Subtitle L--Codification of Budget Process Provisions

Sec. 12601. Gender neutrality.

Sec. 12602. Repeal of obsolete provisions.

Sec. 12603. Standardization of additional deficit control provisi ons.

Sec. 12604. Codification of provision regarding revenue estimates .

Sec. 12606. Codification of rules regarding savings transfers bet ween fiscal years.

Sec. 12608. Technical revisions of Gramm-Rudman-Hollings.

Sec. 12609. Codification of precedent with regard to conference r eports and amendments between houses.

Sec. 12610. Conforming change to title 31.

Subtitle M--Budget Disclosure

Sec. 12651. Debt increase as measure of deficit.

Sec. 12652. Contingent liabilities of the Federal Government.

Sec. 12653. Display of Federal retirement trust fund balances.

Subtitle N--Exercise of Rulemaking Powers

Sec. 12701. Exercise of rulemaking powers.

Subtitle A--Deficit Reduction

SEC. 12051. DEFICIT TARGETS.

(a) DEFINITION OF MAXIMUM DEFICIT- Section 3(7) of the Congressiona l Budget Act of 1974 is amended by striking subparagraphs (F), (G), and (H), and inserting the following:

`(F) with respect to the fiscal year beginning October 1, 1 990, $242,000,000,000;

`(G) with respect to the fiscal year beginning October 1, 1 991, $219,000,000,000;

`(H) with respect to the fiscal year beginning October 1, 1 992, $165,000,000,000;

`(I) with respect to the fiscal year beginning October 1, 1 993, $86,000,000,000; and

`(J) with respect to the fiscal year beginning October 1, 1 994, $62,000,000,000; or

with respect to each such fiscal year, such revised amounts as the Of fice of Management and Budget shall estimate in its report under section 251(a)( 2) of the Balanced Budget and Emergency Deficit Reduction Act of 1985 in strict conformance with the provisions of section 251(a)(1)(E) of that Act.'.

(b) BUDGET ESTIMATES AND DETERMINATIONS- Section 251(a)(1) of the B alanced Budget and Emergency Deficit Reduction Act of 1985 is amended--

(1) in subparagraph (A), by inserting after `such fiscal year' the following: `(and each other fiscal year beginning after the date of the repo rt under this section for which section 3(7) of the Congressional Budget Act of 1974 sets forth maximum deficit amounts)';

(2) in subparagraph (C), by striking `and' at the end thereof; and

(3) by inserting at the end thereof the following new subparagr aphs:

`(E)(i) in calendar years 1991 and 1992, estimate the neces sary revisions to the maximum deficit amounts (for each fiscal year beginning af ter the date of the report under this section for which section 3(7) of the Cong ressional Budget Act of 1974 sets forth maximum deficit amounts) caused solely b y--

`(I) changes in the budgetary accounting for credit and in the definition of `budget authority', and

`(II) economic and technical changes, which shall equal --

`(aa) the deficit in the budget baseline set forth pursuant to paragraph (6) of this subsection, minus

`(bb)(aaa) the net deficit increase (if any) caused by laws (as estimated at the time of enactment of such laws and submitted under section 252A(d) or 252B(e)) enacted after the date of enactment of the Omnibus Budget Reconciliation Act of 1990 (adjusting for any sequestration), and

`(bbb) the maximum deficit amount as it existed imm ediately before the issuance of the report, and

`(ii) in calendar year 1993, estimate the revisions to the maximum deficit amounts (for each fiscal year beginning after the date of the re port under this section for which section 3(7) of the Congressional Budget Act o f 1974 sets forth maximum deficit amounts) caused by only changes in the budgeta ry accounting for credit; and

`(F) estimate the necessary revisions to the defense, inter national, and domestic discretionary spending allocations set forth in section 1 2052 of the Omnibus Budget Reconciliation Act of 1990 for each appropriate fisca l year caused solely by--

`(i) changes in the budgetary accounting for credit and in the definition of `budget authority', and

`(ii) changes in forecasted inflation using only change s in the forecast of the fiscal year average of the estimated gross national pro duct fixed-weight price deflator.'.

SEC. 12052. DISCRETIONARY SPENDING LIMITS.

(a) AGGREGATE ALLOCATIONS FOR DEFENSE- The levels of budget authori ty and outlays for fiscal years 1991, 1992, and 1993 for discretionary spending within major functional category 050 (National Defense) shall be--

(1)(A) for fiscal year 1991:

(i) new budget authority, $288,918,000,000,
< /ul>
(ii) outlays, $297,660,000,000,

(B) for fiscal year 1992:

(i) new budget authority, $291,643,000,000,
< /ul>
(ii) outlays, $295,744,000,000, and

(C) for fiscal year 1993:

(i) new budget authority, $291,785,000,000,
< /ul>
(ii) outlays, $292,686,000,000; or

(2) with respect to each such fiscal year, such revised level a s the Office of Management and Budget shall estimate in its report under section 251(a)(2) of the Balanced Budget and Emergency Deficit Reduction Act of 1985 in strict conformance with the provisions of section 251(a)(1)(F) of that Act.

(b) AGGREGATE ALLOCATIONS FOR INTERNATIONAL AFFAIRS- The levels of budget authority and outlays for fiscal years 1991, 1992, and 1993 for discretio nary spending within major functional category 150 (International Affairs) shall be--

(1)(A) for fiscal year 1991:

(i) new budget authority, $20,100,000,000,

(ii) outlays, $18,600,000,000,

(B) for fiscal year 1992:

(i) new budget authority, $20,500,000,000,

(ii) outlays, $19,100,000,000, and

(C) for fiscal year 1993:

(i) new budget authority, $21,400,000,000,

(ii) outlays, $19,600,000,000; or

(2) with respect to each such fiscal year, such revised level a s the Office of Management and Budget shall estimate in its report under section 251(a)(2) of the Balanced Budget and Emergency Deficit Reduction Act of 1985 in strict conformance with the provisions of section 251(a)(1)(F) of that Act.

(c) AGGREGATE ALLOCATIONS FOR DOMESTIC DISCRETIONARY SPENDING- The levels of total budget authority and outlays for fiscal years 1991, 1992, and 19 93 for all discretionary spending in categories other than major functional cate gories 050 (National Defense) and 150 (International Affairs) shall be--
(1)(A) for fiscal year 1991:

(i) new budget authority, $182,700,000,000,
< /ul>
(ii) outlays, $198,100,000,000,

(B) for fiscal year 1992:

(i) new budget authority, $191,300,000,000,
< /ul>
(ii) outlays, $210,100,000,000, and

(C) for fiscal year 1993:

(i) new budget authority, $198,300,000,000,
< /ul>
(ii) outlays, $221,700,000,000; or

(2) with respect to each such fiscal year, such revised level a s the Office of Management and Budget shall estimate in its report under section 251(a)(2) of the Balanced Budget and Emergency Deficit Reduction Act of 1985 in strict conformance with the provisions of section 251(a)(1)(F) of that Act.

(d) AGGREGATE ALLOCATIONS FOR DISCRETIONARY SPENDING- The levels of budget authority and outlays for fiscal years 1994 and 1995 for discretionary s pending shall be--

(1)(A) for fiscal year 1994:

(i) new budget authority, $510,800,000,000,
< /ul>
(ii) outlays, $534,800,000,000, and

(B) for fiscal year 1995;

(i) new budget authority, $517,700,000,000,
< /ul>
(ii) outlays, $540,800,000,000, or

(2) with respect to each such fiscal year, such revised level a s the Office of Management and Budget shall estimate in its report under section 251(a)(2) of the Balanced Budget and Emergency Deficit Reduction Act of 1985 in strict conformance with the provisions of section 251(a)(1)(F) of that Act.

(e) BUDGET RESOLUTIONS-

(1) HOUSE OF REPRESENTATIVES- The Committee on the Budget of th e House of Representatives shall report a concurrent resolution on the budget fo r fiscal years 1992, 1993, 1994, and 1995 pursuant to section 301 of the Congres sional Budget Act of 1974, in accordance with the appropriate levels of budget a uthority and budget outlays for major functional category 050 (National Defense) and for all discretionary spending in categories other than major functional ca tegory 050 as set forth in subsections (a), (b), and (c).

(g)(1) ADDITIONAL TECHNICAL REVISIONS- Notwithstanding any other pr ovision of law, the Director of the Office of Management and Budget shall make t echnical reestimates (in addition to those that the Director may make pursuant t o section 251(a)(1)(E) and 251(a)(1)(F) of the Balanced Budget and Emergency Def icit Reduction Act of 1985) to allow increased funding in the following amounts, and such amounts shall be added to the allocations under section 12052 and shal l not be counted as increasing the deficit for purposes of sections 251, 252, 25 2A, and 252B of the Balanced Budget and Emergency Deficit Control Act of 1985--

(A) in addition to any other amounts under this paragraph, for each of fiscal years 1992 and 1993, in the amounts of--

(i) up to 0.021 percent of the total of budget authority in the allocations in subsections (a), (b), and (c) (together), for fiscal years 1 991, 1992, and 1993 (together), for defense discretionary spending budget author ity under subsection (a); and

(ii) up to 0.079 percent of the total of budget authority i n the allocations made in subsections (a), (b), and (c) (together) for fiscal ye ars 1991, 1992, and 1993 (together), for international affairs discretionary spe nding budget authority under subsection (b);

(iii) 0.1 percent of the total of budget authority in the a llocations in subsections (a), (b), and (c) (together), for fiscal years 1991, 1 992, and 1993 (together), for domestic discretionary spending budget authority u nder subsection (c);

(B) in addition to any other amounts under this paragraph, the estimated costs of an appropriation enacted in calendar year 1990 or 1991 that f orgives the Arab Republic of Egypt's Foreign Military Sales indebtedness to the United States and any part of the Government of Poland's indebtedness to the Uni ted States;

(C) in the addition to any other amounts under this paragraph, the amount provided by an appropriation enacted in fiscal year 1992 to purchase Special Drawing Rights from the International Monetary Fund as part of its Ninth General Review of Quotas;

(D) in addition to any other amounts under this paragraph, amou nts not to exceed the following for the Internal Revenue Service compliance init iative to be provided to raise additional revenues from increased Internal Reven ue Service compliance--

(i) for fiscal year 1991:

(I) new budget authority, $191,000,000,
< /ul>

(II) outlays, $183,000,000,

(ii) for fiscal year 1992:

(I) new budget authority, $172,000,000,
< /ul>

(II) outlays, $169,000,000,

(iii) for fiscal year 1993:

(I) new budget authority, $183,000,000,
< /ul>

(II) outlays, $179,000,000,

(iv) for fiscal year 1994:

(I) new budget authority, $187,000,000,
< /ul>

(II) outlays, $183,000,000, and

(v) for fiscal year 1995:

(I) new budget authority, $188,000,000,
< /ul>

(II) outlays, $184,000,000; and

the prior-year outlays resulting from these appropriations of bud get authority; and

(E) in addition to any other amounts under this paragraph, such amounts as the President designates as emergency requirements in a request for appropriations and that the Congress so designates in statute.

Emergency Desert Shield costs mean those incremental costs direct ly associated with the increase in operations in the Middle East and do not incl ude costs that would be experienced by the Department of Defense as part of its normal operations absent Operation Desert Shield.

(2) Notwithstanding any other provision of law, concurrent resoluti ons on the budget for fiscal years 1992, 1993, 1994, and 1995 under section 301 or 304 of the Congressional Budget Act of 1974 may set forth levels consistent w ith allocations increased by--

(A) the budget authority amounts in subparagraph (A) and by the composite outlays per category consistent with them; and

(B) the budget authority and outlay amounts in subparagraph (B) , (C), (D), (E), and (F).

(h)(1) FURTHER ADDITIONAL TECHNICAL REVISIONS- (1) Notwithstanding any other provision of law, the Director of the Office of Management and Budget may make technical reestimates (in addition to those that the Director may make pursuant to section 251(a)(1)(E) and 251(a)(1)(F) of the Balanced Budget and Eme rgency Deficit Reduction Act of 1985, but solely due to outlays exceeding the am ount of outlays set forth in subsections (a), (b), and (c), resulting from chang es between outlays estimated for enacted budget authority and the spendout rate assumed in the relationship between budget authority and outlays set forth in su bsections (a), (b), and (c), less any outlays used pursuant to subsections (g)(1 )(A) to allow increased funding in the following amounts and such amounts shall not be counted as increasing the deficit under sections 251, 252, 252A, and 252B of the Balanced Budget and Emergency Deficit Control Act of 1985--

(A) for each of fiscal years 1991, 1992, and 1993, in the amoun ts of--

(i) $2,500,000,000 for defense discretionary spending outla ys under subsection (a);

(ii) $1,500,000,000 for international affairs discretionary spending outlays under subsection (b); and

(iii) $2,500,000,000 for domestic discretionary spending ou tlays under subsection (c); and

(B) for each of fiscal years 1994 and 1995, in the amount of $6 ,500,000,000 for discretionary spending outlays under subsection (d).
< /ul>
SEC. 12053. DISCRETIONARY SPENDING LIMIT SEQUESTRATION.

(a) DATE OF FINAL ORDER-

(1)(A) The Balanced Budget and Emergency Deficit Control Act of 1985 is amended--

(i) in section 251(c)(1), by striking `October 10' and inse rting `November 10';

(ii) in section 253, by striking `November 15' and insertin g `December 15';

(iii) in section 252(b)(1), by striking `October 15' and in serting `November 15';

(iv) in section 252(c)(2)(D), by striking `October 20' and inserting `November 20'; and

(v) in section 257(c)(2), by striking `October 15' and inse rting `November 15'.

(B) The amendments made by this paragraph shall take effect beg inning in calendar year 1991.

(b) SPENDING CATEGORY SEQUESTER- Part C of the Balanced Budget and Emergency Deficit Control Act of 1985 is amended by inserting after section 252 the following:

`SEC. 252A. DISCRETIONARY SPENDING LIMIT SEQUESTRATION.

`(a) REPORTING OF EXCESS-

`(1) ESTIMATES AND DETERMINATIONS- The Directors shall, with re spect to each appropriations Act--

`(A) determine the aggregate budget levels of outlays that may be anticipated as a result of the enactment of such appropriations Act--

`(i) for the defense, international affairs, and domest ic discretionary categories as set forth in section 12502 of the Omnibus Budget Reconciliation Act of 1990 in fiscal years 1991, 1992, and 1993; and

`(ii) for discretionary spending as set forth in sectio n 12502 of the Omnibus Budget Reconciliation Act of 1990 in fiscal years 1994 an d 1995; and

`(B) determine whether such Appropriations Act causes the a ggregate allocation for budget authority or outlays in section 12502 of the Omni bus Budget Reconciliation Act of 1990 (as revised under that section and section 251(a)(1)(F) of this Act) to be exceeded.

`(2) REPORT- Based on the determinations required in paragraph (1), the Directors of the Congressional Budget Office and the Office of Manageme nt and Budget shall each report to the President not later than 5 days after the enactment of an appropriations Act identifying the amount of any budget authori ty or outlay excess in any spending category set forth in section 12502 of the O mnibus Budget Reconciliation Act of 1990 resulting from the enactment of the app ropriations Act, estimating the aggregate amount of budget authority or outlay r eductions in the spending category necessary to eliminate the excess, and specif ying by account within the spending category the budget baseline from which redu ctions are taken and the amounts and percentages by which such accounts must be reduced during such fiscal year in order to make the reductions required by this section.

`(b) SEQUESTER ORDER- Based on the report the Director of the Offic e of Management and Budget issued pursuant to subsection (a), the President shal l issue a sequester order (making reductions uniformly across each nonexempt acc ount, and within each account, uniformly across each program, project, and activ ity) applicable to any spending category in excess of the allocation limit for s uch category 15 days after the enactment of the appropriation Act appropriating amounts in excess of allocation limits (or on November 15, if the date of enactm ent is after June 30 or before November 1 of the fiscal year for which such Act makes appropriations).

`(c) ECONOMIC AND TECHNICAL ASSUMPTIONS- Under this section, the Di rector of the Office of Management and Budget shall use the same economic and te chnical assumptions as used by the budget submitted by the President for the app ropriate fiscal year under section 1105 of title 31, United States Code.
`(d) OMB ESTIMATES- Within 5 calendar days after the enactment of a ny appropriations Act, the Director of the Office of Management and Budget shall submit to the Senate and the House of Representatives an estimate of the amount of change in budget authority, outlays, or receipts (if any) in each fiscal yea r through fiscal year 1995 resulting from that legislation. Those estimates sha ll be made using the same economic and technical assumptions as used by the budg et submitted by the President for the appropriate fiscal year under section 1105 of title 31, United States Code.'.

(c) CONFORMING CHANGES- The Balanced Budget and Deficit Reduction A ct of 1985 is amended--

(1) in section 251(a)(3)(B), by inserting after `and 257,' the following: `and after having made such reductions, if any, as may be required by sections 252A and 252B,';

(2) in section 251(a)(6)--

(A) by amending subparagraphs (C) and (D) to read as follow s:

`(C) in the case of all accounts to which subparagraph (A) does not apply, assuming appropriations at the levels set forth in section 12502 of the Omnibus Budget Reconciliation Act of 1990 (as adjusted under that sectio n and section 251(a)(1)(F) of this Act), except assuming such lower levels in an nual appropriations or continuing appropriations that have been enacted before t he date of the report for the entire fiscal year that are enacted at a lower lev el, when appropriations have been enacted covering all subcommittees covered by the relevant category;

`(D) assuming that any sequester under section 252B that wi ll be ordered on November 15 has been put into effect before the snapshot date;' ;

(3) in section 252(a)(1), by inserting after `251(a)(2)(B),' th e following: `and after having ordered such reductions, if any, as may be requir ed by sections 252A and 252B,';

(4) in section 252(a)(4), by striking subparagraph (A) and ins erting the following:

`(A) IN GENERAL- Notwithstanding section 257(7), the net am ount of deficit increase caused by laws enacted after November 15 of the previou s calendar year and before October 1 (as estimated at the time of enactment of s uch laws and submitted under section 252A(d) or 252B(e)), after taking effect an y sequestration during that period, shall be withheld in amounts equal to those that would be sequestered if the appropriate sequester orders under this sectio n, section 252A, and section 252B were issued on October 1, pending the issuance of final order under those sections, and shall be permanently sequestered or re duced in accordance with those final orders upon the issuance of those final ord ers.';

(5) in section 252(a)(4)(B)(ii)--

(A) by striking `order under subsection (b)' and inserting `orders under subsection (b) and section 252B'; and

(B) by striking `2 percent' and inserting `4 percent'; and

(6) in section 256(d)(1)(B), by striking `2 percent' and insert ing `4 percent'.

SEC. 12054. RESTORATION OF FUNDS SEQUESTERED.

(a) ORDER RESCINDED- Upon the enactment of this Act, the orders iss ued by the President on August 25, 1990, and October 15, 1990, pursuant to secti on 252 of the Balanced Budget and Emergency Deficit Control Act of 1985 are resc inded.

(b) AMOUNTS RESTORED- Any action taken to implement the orders refe rred to in subsection (a) shall be reversed, and any sequesterable resource that has been reduced or sequestered by such orders is restored, revived, or release d and shall be available to the same extent and for the same purpose as if the o rders had not been issued.

SEC. 12055. CONFORMING CHANGES.

(a) EXPIRATION- Section 275(b)(1) of the Balanced Budget and Emerge ncy Deficit Reduction Act of 1985 is amended by striking `1993' and inserting `1 995'.

(b) MARGIN- The Balanced Budget and Emergency Deficit Reduction Act of 1985 is amended--

(1) in section 251(a)(1)(B), by striking `$10,000,000,000 (zero in the case of fiscal year 1993)' and inserting `the margin';

(2) in section 251(a)(2), by striking $10,000,000,000 (zero in the case of fiscal year 1993)' and inserting `the margin'; and

(3) in section 257, by amending paragraph (10) to read as follo ws:

`(10) The term `margin' means zero with respect to each of fisc al years 1991, 1992, and 1993, and $15,000,000,000 with respect to each of fisca l years 1994 and 1995.'.

Subtitle B--Pay-As-You-Go

SEC. 12101. PAY-AS-YOU-GO PROVISIONS IN BUDGET RESOLUTIONS.

Section 301(b) of the Congressional Budget Act of 1974 is amended--

(1) in paragraph (3), by striking `and';

(2) by redesignating paragraph (4) as paragraph (5); and

(3) by inserting after paragraph (3) the following new paragrap h:

`(4) set forth pay-as-you-go procedures whereby--

`(A) budget authority and outlays may be allocated to a com mittee for legislation that increases funding for entitlement and mandatory spen ding programs within its jurisdiction if that committee or the committee of conf erence on such legislation reports such legislation, if, to the extent that the costs of such legislation are not included in the concurrent resolution on the b udget, the enactment of such legislation will not increase the deficit (by virtu e of either deficit reduction in the bill or previously passed deficit reduction ) in the resolution for the first fiscal year covered by the concurrent resoluti on on the budget, and will not increase the total deficit for the period of fisc al years covered by the concurrent resolution on the budget;

`(B) upon the reporting of legislation pursuant to subparag raph (A), and again upon the submission of a conference report on such legislati on (if a conference report is submitted), the chairman of the Committee on the B udget of the Senate or the House of Representatives (as the case may be) may fil e with the Senate or the House of Representatives (as the case may be) appropria tely revised allocations under section 302(a) and revised functional levels and aggregates to carry out this paragraph;

`(C) such revised allocations, functional levels, and aggre gates shall be considered for the purposes of this Act as allocations, functiona l levels, and aggregates contained in the concurrent resolution on the budget; a nd

`(D) the appropriate committee shall report appropriately r evised allocations pursuant to section 302(b) of this Act to carry out this para graph; and'.

SEC. 12102. PAY-AS-YOU-GO SEQUESTRATION.

(a) REPORTS- Section 251(a)(2)(A) of the Balanced Budget and Emerge ncy Deficit Control Act of 1985 is amended by striking `estimating the aggregate amount of required outlay reductions' and inserting `estimating the amount of r equired mandatory outlay reductions under section 252B and the aggregate amount of required outlay reductions'.

(b) MANDATORY REDUCTIONS- The Balanced Budget and Emergency Deficit Reduction Act of 1985 is amended by adding after section 252 the following new section:

`SEC. 252B. ENFORCING PAY-AS-YOU-GO.

`(a) FISCAL YEARS 1992-1995 ENFORCEMENT- The purpose of this sectio n is to assure that any legislation enacted after the date of enactment of this section that affects direct spending or receipts that increases the deficit in a ny fiscal year covered by this Act will trigger an offsetting sequestration.

`(b) SEQUESTRATION; LOOK-BACK- On November 15 of each fiscal year, there shall be a sequestration pursuant to subsection (d) to offset the amount o f any net deficit increase in that fiscal year or the prior fiscal year caused b y all direct spending and receipts legislation enacted after the date of enactme nt of this section (after adjusting for any sequestration of direct spending acc ounts in a prior year). The Director of OMB shall calculate the amount of net de ficit increase, if any, in each such fiscal year by adding--

`(1) all estimates of the effect of direct spending and receipt s legislation on the deficit published under subsection (d) applicable to each s uch fiscal year; and

`(2) the estimated amount of deficit reduction applicable to ea ch such fiscal year resulting from the prior year's sequestration, if any, as pu blished in the Director of OMB's final sequestration report for that year.< /ul>

`(c) ELIMINATING A DEFICIT INCREASE- (1) Actions to reduce direct s pending accounts shall be taken in the following order:

`(A) All reductions in automatic spending increases specified i n section 257(1) shall be made.

`(B) If additional reductions in direct spending accounts are r equired to be made, the maximum reduction permissible under sections 256(c) (gua ranteed student loans) and 256(f) (foster care and adoption assistance) shall be made.

`(C) If additional reductions in direct spending accounts are r equired to be made, each remaining nonexempt mandatory account shall be reduced by the uniform percentage necessary to make the reductions in direct spending r equired except that--

`(i) the medicare program specified in section 256(d) shall not be reduced by more than 4 percent; and

`(ii) the uniform percent applicable to all other programs under this paragraph shall be increased (if necessary) to a level sufficient to achieve the required reduction in direct spending.

`(2) For purposes of this subsection, accounts shall be assumed to be at the level in the budget baseline determined under section 251(a)(6).< /ul>
`(d) OMB ESTIMATES- Within 5 calendar days after the enactment of a ny direct spending or receipts legislation, the Director of OMB shall submit to the Senate and the House of Representatives an estimate of the amount of change in the deficit in each fiscal year through fiscal year 1995 resulting from that legislation. Those estimates shall be made using the same economic and technical assumptions as used by the budget submitted by the President for the appropriat e fiscal year under section 1105 of title 31, United States Code.'.

Subtitle C--Social Security Trust Fund

SEC. 12151. EXCLUSION OF SOCIAL SECURITY TRUST FUNDS WHEN CALCULATING MAXIMUM DEFICIT AMOUNTS.

(a) DEFINITION OF DEFICIT- Section 3(b) of the Congressional Budget and Impoundment Control Act of 1974 is amended by striking the second sentence.

(b) SOCIAL SECURITY ACT- Section 710(a) of the Social Security Act is amended by striking `shall not be included in the totals of the budget' and i nserting `shall not be included in the budget deficit or any other totals of the budget'.

(c) EFFECTIVE DATE- The amendments made by subsections (a) and (b) shall apply with respect to fiscal years beginning with fiscal year 1991.
SEC. 12152. SOCIAL SECURITY FIREWALL AND POINT OF ORDER.

(a) EXCLUSION FROM RECONCILIATION PROCESS- Section 310(g) of the Co ngressional Budget Act of 1974 is amended by striking beginning with `that conta ins recommendations' and all that follows through the period and inserting: `tha t changes the old-age, survivors, and disability program established under title II of the Social Security Act or its financing without regard to whether such c hanges increase, decrease, or have no impact on the outlays of and income to suc h program.'.

(b) EXCLUSION OF SOCIAL SECURITY FROM CONGRESSIONAL BUDGET- Section 301(a) of the Congressional Budget Act of 1974 is amended by adding at the end thereof the following: `The concurrent resolution shall not include the outlays and revenue totals of the old age, survivors, and disability insurance program e stablished under title II of the Social Security Act or the related provisions o f the Internal Revenue Code of 1986 in the surplus or deficit totals required by this subsection or in any other surplus or deficit totals required by this titl e.'.

(c) CONCURRENT RESOLUTION ON THE BUDGET- Section 301(a) of the Cong ressional Budget Act of 1974 is amended--

(1) by striking `and' at the end of paragraph (4);

(2) by striking the period at the end of paragraph (5) and inse rting a semicolon; and

(3) by adding after paragraph (5) the following new paragraphs:

`(6) Social Security outlays, which for purposes of this title shall be composed of outlays of the old-age, survivors, and disability insurance program established under title II of the Social Security Act; and

`(7) Social Security revenues, which for purposes of this title shall be composed of revenues of the old-age, survivors, and disability insuran ce program established under title II of the Social Security Act and the related provisions of the Internal Revenue Code of 1986.'.

(d) POINT OF ORDER- Section 301(i) is amended by adding at the end thereof the following new paragraph:

`(3) It shall not be in order in the Senate to consider any con current resolution on the budget as reported to the Senate that would decrease t he difference between Social Security revenues and Social Security outlays in an y of fiscal years covered by the concurrent resolution.'.

(e) COMMITTEE ALLOCATIONS-

(1) Section 302(a)(2) of the Congressional Budget Act of 1974 i s amended by inserting `Social Security outlays,' after `budget outlays,'.< /ul>

(2) Section 302(f)(2) of the Congressional Budget Act of 1974 i s amended by inserting before the period the following: `or provides for Social Security outlays in excess of the appropriate allocation of Social Security outl ays under subsection (a)'.

(3) Section 302(f)(2) of such Act is further amended by adding at the end thereof the following: `In applying this paragraph--

`(A) estimated Social Security outlays shall be deemed to b e reduced by the excess of estimated Social Security revenues (including Social Security revenues provided for in the bill, resolution, amendment, or conference report with respect to which this paragraph is applied) over the appropriate le vel of Social Security revenues specified in the most recently adopted concurren t resolution on the budget; and

`(B) estimated Social Security outlays shall be deemed incr eased by the shortfall of estimated Social Security revenues (including Social S ecurity revenues provided for in the bill, resolution, amendment, or conference report with respect to which this paragraph is applied) below the appropriate le vel of Social Security revenues specified in the most recently adopted concurren t resolution on the budget.

The Chairman of the Committee on the Budget of the Senate may fil e with the Senate appropriately revised allocations under subsection (a) and rev ised functional levels and aggregates to reflect the application of the precedin g sentence. Such revised allocations, functional levels, and aggregates shall be considered as allocations, functional levels, and aggregates contained in the m ost recently agreed to concurrent resolution on the budget, and the appropriate committees shall report revised allocations pursuant to subsection (b).'.

(f) POINT OF ORDER UNDER SECTION 311- Section 311(a) of the Congres sional Budget Act of 1974 is amended--

(1) by inserting `or Social Security outlays' after `total budg et outlays';

(2) by inserting `(or Social Security revenues to be less than the appropriate level of Social Security revenues)' after `total revenues'; and

(3) by adding at the end thereof the following: `In applying th is subsection--

`(A)(i) estimated Social Security outlays shall be deemed t o be reduced by the excess of estimated Social Security revenues (including thos e provided for in the bill, resolution, amendment, or conference report with res pect to which this subsection is applied) over the appropriate level of Social S ecurity revenues specified in the most recently agreed to concurrent resolution on the budget;

`(ii) estimated Social Security revenues shall be deemed to be increased to the extent that estimated Social Security outlays are less (tak ing into account the effect of the bill, resolution, amendment, or conference re port to which this subsection is being applied) than the appropriate level of So cial Security outlays in the most recently agreed to concurrent resolution on th e budget; and

`(B)(i) estimated Social Security outlays shall be deemed t o be increased by the shortfall of estimated Social Security revenues (including Social Security revenues provided for in the bill, resolution, amendment, or co nference report with respect to which this subsection is applied) below the appr opriate level of Social Security revenues specified in the most recently adopted concurrent resolution on the budget; and

`(ii) estimated Social Security revenues shall be deemed to be reduced by the excess of estimated Social Security outlays (including Social Security outlays provided for in the bill, resolution, amendment, or conference report with respect to which this subsection is applied) above the appropriate level of Social Security outlays specified in the most recently adopted concurre nt resolution on the budget.

The chairman of the Committee on the Budget of the Senate may fil e with the Senate appropriately revised allocations under section 302(a) and rev ised functional levels and aggregates to reflect the application of the precedin g sentence. Such revised allocations, functional levels, and aggregates shall be considered as allocations, functional levels, and aggregates contained in the m ost recently agreed to concurrent resolution on the budget, and the appropriate Committees shall report revised allocations pursuant to section 302(b).'

(g) LONG-RANGE ACTUARIAL ESTIMATES- Title II of the Social Security Act is amended by adding at the end thereof the following new section:

`ACTUARIAL EVALUATION OF LEGISLATION

`SEC. 234. (a)(1) The Secretary shall prepare and transmit to the C ommittee on Finance of the Senate and the Committee on Ways and Means of the Hou se of Representatives an actuarial analysis of the 75-year effect of legislation affecting the programs established by this title--

`(A) when it appears that such legislation is likely to be acte d upon by the Congress, or

`(B) upon the request of a Member of the United States Senate.

`(2) The estimate required by paragraph (1) shall, at a minimum, di splay the change in long-range balance under each of the alternative sets of ass umptions used in the most recent report of the Board of Trustees pursuant to sec tion 201(c)(2). Each such estimate shall bear a certification by the Chief Actua ry of the Social Security Administration as to whether or not the techniques and methodology used in its preparation are generally accepted within the actuarial profession and whether or not the assumptions and resulting cost estimates are reasonable. Upon receipt of an actuarial analysis described in this subsection, the chairman of the Committee on Finance shall file such analysis with the Senat e.

`(b)(1) It shall not be in order in the Senate to consider any meas ure or amendment that would modify the program established by this title (or the revenue provisions that provide funding for such program), unless--

(A) the Committee on Finance has submitted to the Senate the ac tuarial analysis described in subsection (a) with respect to such bill, resoluti on, amendment, or conference report, or

(B) the Senate has agreed by unanimous consent or by motion des cribed in paragraph (2) to dispense with such actuarial analysis.

`(2) A motion described in paragraph (1)(B) shall not be considered to be agreed to unless it receives the affirmative vote of three fifths of the membership of the Senate duly chosen and sworn, except that such a motion shall be considered approved upon an affirmative vote of a majority of Senators presen t and voting if--

`(A) an actuarial analysis was requested from the Secretary mor e than 72 hours before the motion is voted on (or 24 hours if such motion relate s to an amendment in the first degree to a bill dealing with Social Security oth er than a Committee amendment or 1 hour if the motion relates to an amendment in the second degree to an amendment or a bill dealing with Social Security); and

`(B) such analysis has not been provided by the Secretary.'.

Subtitle D--Multiyear Budgeting to Ensure Permanent Savings

SEC. 12201. MULTIYEAR BUDGETING.

(a) APPROPRIATE LEVELS- Section 301(a) of the Congressional Budget Act of 1974 is amended in the matter before paragraph (1) by striking `planning levels for each of the two' and inserting `for each of the 4'.

(b) DECLARATION OF PURPOSE- Section 2(2) of that Act is amended by striking `each year'.

(c) CONCURRENT RESOLUTION ON THE BUDGET-

(1) Section 301(b)(3) of that Act is amended by striking `for s uch fiscal year' and inserting `for any one of the fiscal years covered by the c oncurrent resolution'.

(2) Section 301(e) of that Act is amended--

(A) in the first sentence by striking `for each fiscal year '; and

(B) in paragraph (6) by striking `such fiscal year' and ins erting `the first fiscal year covered by the concurrent resolution';

(3) Paragraphs (1) and (2) of section 301(f) of that Act are am ended by striking `for the fiscal year beginning after the date on which such Ec onomic Report is received by the Congress' each place it appears.

(4) Section 301(i)(1)(A) of that Act is amended--

(A) by striking `for a fiscal year'; and

(B) by striking `for such fiscal year' the first place it a ppears and inserting `for the first fiscal year'.

(d) COMMITTEE ALLOCATIONS-

(1) Paragraphs (1) and (2) of section 302(a) of that Act are am ended by inserting `for each fiscal year in such resolution' after `estimated al location' each place it appears.

(2) Section 302(b) of that Act is amended--

(A) in paragraph (1) by inserting after `to it' the followi ng: `for the first fiscal year'; and

(B) in paragraph (2)--

(i) by inserting after `(2)' the following: `for'; and

(ii) by striking all after `statement' through the peri od and inserting the following: `, for purposes of subsections (c) and (f), the allocation made pursuant to subsection (a) shall constitute the allocation pursu ant to this subsection.'.

(3) Section 302(c) of that Act is amended--

(A) by inserting after `for a fiscal year' each place it ap pears the following: `or fiscal years'; and

(B) by inserting after `for such fiscal year' each place it appears the following: `or fiscal years'.

(4) Section 302(f)(1) of that Act is amended by--

(A) striking `for a fiscal year'; and

(B) striking `such fiscal year' each place it appears in th e matter preceding subparagraph (A) and inserting the following: `the first fisc al year covered by the resolution and for the period including the first fiscal year and the following 4 fiscal years'.

(5) Section 302(f)(2) of that Act is amended by--

(A) striking `for a fiscal year'; and

(B) striking `such outlays or authority' inserting the foll owing: `the appropriate outlays and authority for the first fiscal year covered by the resolution and for the period including the first fiscal year and the fol lowing 4 fiscal years'.

(e) SECTION 303 POINT OF ORDER- Section 303(a) of that Act is amend ed in the matter following paragraph (5) by inserting after `budget for such fis cal year' the following: `(for committees covered by section 302(b)(2)) or budge t for which such fiscal year is the first fiscal year covered (for committees co vered by section 302(b)(1))'.

(f) PROCEDURES FOR CONSIDERATION OF BUDGET RESOLUTIONS- Subsections (a)(3) and (b)(3) of section 305 of that Act are amended by striking `for a fis cal year'.

(g) REPORTS AND SUMMARIES OF CONGRESSIONAL BUDGET ACTIONS-
(1)(A) Section 308(a)(1) of that Act is amended--

(i) in the matter preceding subparagraph (A) by inserting a fter `fiscal year' the following: `(or fiscal years)';

(ii) in subparagraph (A) by inserting after `fiscal year' t he following: `(or fiscal years)'; and

(iii) in subparagraph (C) by inserting after `such fiscal y ear' the following: `(or fiscal years)'.

(B) Section 308(a)(2) of that Act is amended by inserting after `fiscal year' the following: `(or fiscal years)'.

(2) Section 308(b)(1) of that Act is amended--

(A) by striking `for a fiscal year' in the first sentence a nd inserting `for each fiscal year covered by a concurrent resolution on the bud get'; and

(B) by striking `such fiscal year' in the second sentence a nd inserting `the first fiscal year covered by the appropriate concurrent resolu tion'.

(h) RECONCILIATION PROCESS- Section 310(a) of that Act is amended--

(1) by inserting after `shall' in the matter preceding paragrap h (1) the following: `(for at least 3 fiscal years)';

(2) in paragraph (1) by striking `such fiscal year' each place it appears and inserting the following: `such fiscal years'; and

(3) by adding at the end thereof the following:

`To the extent that a concurrent resolution on the budget specifies a nd directs matters described in paragraphs (1), (2), or (4), the concurrent reso lution shall specify and direct deficit reduction for the 5 years covered by the concurrent resolution in amounts equal to or greater than 5 times that specifie d and directed for the first year covered for each committee directed.'.
(i) SECTION 311 POINT OF ORDER-

(1) Section 311(a) of that Act is amended--

(A) by striking `for a fiscal year';

(B) by inserting `for the first fiscal year' after `set for th' the first place it appears;

(C) by striking `budget for such fiscal year' and inserting `budget covering such fiscal year';

(D) by inserting `for the first fiscal year covered by the resolution and for the period including the first fiscal year plus the following 4 fiscal years' after `set forth' the second place it appears; and

(E) by striking `deficit for such fiscal year' and insertin g `deficit for the first fiscal year covered by the resolution'.
< /ul>
(2) Section 311(b) of that Act is amended by inserting after `s uch fiscal year' each place it appears the following: `(or fiscal years)'.< /ul>

(j) BILLS PROVIDING NEW SPENDING AUTHORITY- Section 401(b)(2) of th at Act is amended by inserting after `for such fiscal year' the second place it appears the following: `(or fiscal years)'.

SEC. 12202. PRESIDENT'S BUDGET TO ADDRESS OUT-YEARS.

(a) PRESIDENTS' BUDGET TO ADDRESS OUT-YEARS- Section 1105(f) of tit le 31, United States Code, is amended--

(1) in paragraph (1) by inserting after `such fiscal year' each time it appears `and the 4 fiscal years after that year';

(2) in paragraph (2) by inserting after `any fiscal year' the f ollowing: `(including the 4 fiscal years after the fiscal year for which the bud get is submitted)'; and

(3) by striking paragraph (4) and redesignating paragraph (5) a s paragraph (4).

(b) DETAIL OF PRESIDENTS' BUDGETS- The second sentence of section 1 104(b) of title 31, United States Code, is amended by striking `fiscal year 1950 ' and inserting `fiscal year 1990 submitted on January 9, 1989'.

SEC. 12203. STRENGTHENING THE PROHIBITION OF SPENDING BEFORE BUDGETIN G.

Section 303(b) of the Congressional Budget and Impoundment Control Act of 1974 is amended by striking the first sentence.

Subtitle E--Credit Reform

SEC. 12251. CREDIT REFORMS.

The Congressional Budget and Impoundment Control Act of 1974 is ame nded by adding at the end thereof the following new title:

`TITLE XI--CREDIT REFORM

`SHORT TITLE

`SEC. 1100. This title may be cited as the `Federal Credit Reform A ct of 1990'.

`PURPOSES

`SEC. 1101. The purposes of this title are to--

`(1) measure accurately the costs of Federal credit programs;

`(2) place the cost of credit programs on a budgetary basis equ ivalent to other Federal spending;

`(3) encourage the delivery of benefits in the form most approp riate to the needs of beneficiaries;

`(4) improve the allocation of resources among credit programs and between credit and other spending programs;

`(5) provide for the coordinated accounting and review of Feder al credit programs by the Congressional Budget Office and Office of Management a nd Budget;

`(6) enhance the ability of the Committees on the Budget and th e Committees on Appropriations of the Senate and the House of Representatives to analyze and review of Federal credit programs; and

`(7) modify the legislative and executive budgetary processes t o carry out these purposes.

`DEFINITIONS

`SEC. 1102. For purposes of this title--

`(1) The term `Federal agency' means an executive department, a n independent Federal establishment, or a corporation or other entity establishe d by the Congress that is owned in whole or in part by the United States. The te rm does not include the Board of Governors of the Federal Reserve System or the College Construction Loan Insurance Association.

`(2) The term `direct loan' means a disbursement of funds by th e Federal Government to a non-Federal borrower under a contract that requires th e repayment of such funds with or without interest. The term includes the purcha se of, or participation in, a loan made by another lender. The term does not inc lude the acquisition of a federally guaranteed loan in satisfaction of default c laims or the price support loans of the Commodity Credit Corporation. For the pu rpose of carrying out this title, direct loans may be grouped and treated as a s ingle loan as agreed to by the Director and the head of the affected agency.

`(3) The term `direct loan obligation' means a binding agreemen t entered into by a Federal agency for the Government under which the Federal ag ency agrees to make a direct loan when specified conditions are fulfilled by the borrower.

`(4) The term `loan guarantee' means any guarantee, insurance, or other pledge with respect to the payment of all or a part of the principal or interest on any debt obligation of a non-Federal borrower to a non-Federal lend er, but does not include the insurance of deposits, shares, or other withdrawabl e accounts in financial institutions. For the purposes of carrying out the provi sions of this title, loan guarantees may be grouped and treated as a single loan as agreed to by the Director and the head of the affected agency.

`(5) The term `loan guarantee commitment' means a binding agree ment entered into by a Federal agency for the Government under which the Federal agency agrees to guarantee a loan when specified conditions are fulfilled by th e borrower, the lender, or any other party to the guarantee agreement.

`(6)(A) The term `cost to the Government' means--

`(i) the estimated long-term net cost to the Government of a direct loan or loan guarantee, calculated on a net present value basis; and

`(ii) the cost to the Government resulting from any change or modification in direct or guaranteed loan contract terms that results or will result in additional expenditures by the Government or loss of receipts to the Government.

`(B) In determining the amount of cost to the Government of a d irect loan or loan guarantee, the estimator shall take into account--
< /ul>
`(i) any cash flows to or from the Government resulting fro m the terms and conditions of the direct loan obligation or guarantee commitment , including those resulting from--

`(I) direct outlays,

`(II) repayments (of principal or interest),
< /ul>

`(III) interest payments,

`(IV) interest receipts,

`(V) fees charged by (or on behalf of) the Government,

`(VI) the term to maturity,

`(VII) the payment schedule,

`(VIII) defaults in repayments,

`(IX) delays in repayments,

`(X) prepayments,

`(XI) forbearance and restructuring rights,

`(XII) grace periods,

`(XIII) penalties,

`(XIV) recoveries from the liquidation of collateral, a nd

`(XV) degree of guarantee;

`(ii) the likelihood (based on analysis of historical data) of deviations from the terms and conditions of the direct loan or loan guarante e, including those resulting from--

`(I) changes in the payment schedule,

`(II) defaults in repayments,

`(III) delays in repayments,

`(IV) prepayments,

`(V) forbearance and restructuring rights,

`(VI) grace periods,

`(VII) penalties,

`(VIII) recoveries from the liquidation of collateral, and

`(IX) degree of guarantee; and

`(iii) where historical data is not available or adequate, private market analogues, adjusted to estimate the cost to the Government.< /ul>

`(C) The cost to the Government shall not include administrativ e costs.

`(7) The term `subsidy account' means the budget account or acc ounts into which subsidies are appropriated to cover the cost to the Government of a direct loan or loan guarantee program.

`(8) The term `financing account' means the budget account or a ccounts associated with each subsidy account that--

`(A) provides the non-subsidized funding to non-Government borrowers for Government direct loans obligated on or after October 1, 1991;

`(B) provides direct loans to borrowers and, in accordance with agency loan agreements, makes claim payments for guaranteed loans in defaul t and serves as a reserve for agency loan guarantee commitments made on or after October 1, 1991; and

`(C) receives payments of principal, interest, fees, and pr emiums from or on behalf of borrowers and subsidy payments from subsidy accounts for direct loans obligated or loan guarantees committed on or after October 1, 1991.

If an appropriated account includes both direct loans and loan gu arantees, the affected agency shall maintain separate financing accounts for eac h.

`(9) The term `liquidating account' means the budget account or accounts that--

`(A) provides the funding for direct loans obligated prior to October 1, 1991;

`(B) disburses loans to borrowers and, in accordance with a gency loan agreements, makes claim payments for guaranteed loans in default for direct loans and guaranteed loans obligated prior to October 1, 1991; and

`(C) receives payments of principal, interest, fees, and pr emiums from on or on behalf of borrowers for all direct loans or loan guarantees obligated prior to October 1, 1991.

`(10) The term `Director' means the Director of the Office of M anagement and Budget.

`OMB AND CBO ANALYSIS, COORDINATION, AND REVIEW

`SEC. 1103. (a) IN GENERAL- The Director shall be responsible for c oordinating estimates by Federal agencies required by this title.

`(b) ESTIMATES OF COST TO THE GOVERNMENT BY THE DIRECTOR- With rega rd to direct loans and loan guarantees, the Director shall--

`(1) estimate the cost to the Government, or require estimates to be made by the Federal agencies, for each new direct loan and loan guarantee or for groups of similar new direct loans and loan guarantees, taking into accou nt the factors specified in section 1102(6);

`(2) estimate the cost to the Government, or require estimates to be made by the Federal agencies, for changes or modification in the provision s of existing direct loan and loan guarantee agreements that result in increased cost to the Government;

`(3) if estimates of the cost to the Government are made by the Director, furnish the appropriate Federal agency with the estimates in a timely fashion;

`(4) require timely uniform reporting from Federal agencies on the actual long-term cost to the Government of direct loans and loan guarantees, calculated on a basis prescribed by the Director and consistent with this title , and on loan performance and borrower characteristics;

`(5) in the case of a program for which historical data is inad equate to determine the cost to the Government, oversee the development and impl ementation of systems that will make the collection and maintenance of credit da ta adequate in the future;

`(6) monitor due diligence debt collection efforts;

`(7) assess Federal agency performance; and

`(8) otherwise study and undertake improvements in Federal agen cy credit management.

`(c) DEVELOPMENT OF ESTIMATES-

`(1) IN GENERAL- In developing estimate criteria to be used by Federal agencies, the Director shall, in cooperation with the Director of Congre ssional Budget Office--

`(A) coordinate the development of accurate data on histori cal performance of loans and guarantees; and

`(B) review historical budget data and issue guidelines for the agencies to follow to develop the best possible broad estimates of adjustme nts that would convert aggregate historical budget data to credit reform account ing.

`(2) CONSULTATION WITH CONGRESS- The Director shall also consul t with the chairmen and ranking members of the Committees on the Budget and the Committees on Appropriations of the Senate and the House of Representatives in d eveloping criteria under paragraph (1).

`(d) REVISION OF CRITERIA- Any change by the Director in the criter ia for estimating developed pursuant to subsection (c) may be made only after co nsultation with the Director of the Congressional Budget Office, and the chairme n and ranking members of the Committees on the Budget and Appropriations of the Senate and the House of Representatives.

`(e) ADMINISTRATIVE COSTS- The Director and the Director of the Con gressional Budget Office shall analyze differences in long-term administrative c osts for credit programs versus grant programs and, 6 months after the date of e nactment of this title and when appropriate thereafter, propose changes to Congr ess for incorporating administrative costs in the credit reform accounting proce ss.

`DIRECT LOAN PROGRAMS

`SEC. 1104. (a) AGENCY BUDGET PROPOSAL- For each fiscal year, begin ning with fiscal year 1992, each Federal agency shall include in its budget prop osal and submission to Congress--

`(1) the planned level of new direct loan obligations; and

`(2) the estimated cost to the Government associated with the p roposed direct loan obligations.

`(b) DIRECT LOAN OBLIGATIONS- On or after October 1, 1991, a Federa l agency shall not enter into a direct loan obligation unless--

`(1) an appropriation has been made to the Federal agency for t he cost to the Government; or

`(2) a limitation is enacted in an annual appropriations Act on the use of funds otherwise available to the Federal agency for the cost to the Government.

`(c) COST TO THE GOVERNMENT OF DIRECT LOAN OBLIGATION-

`(1) ESTIMATE OF COST- At the time a direct loan obligation is incurred, the Federal agency shall obtain an estimate of the cost to the Governm ent of the loan from the Director or, at the discretion of the Director, shall m ake such an estimate based upon guidelines established by the Director.

`(2) BUDGET TREATMENT- For the purposes of section 1501 of titl e 31, United States Code--

`(A) the amount of an estimate made under paragraph (1) sha ll constitute an obligation of the subsidy account to pay to the financing accou nt; and

`(B) the face value of the direct loan shall constitute an obligation of the financing account.

`(d) PAYMENT OF COST TO THE GOVERNMENT- The cost to the Government associated with a direct loan as determined in subsection (c) shall be paid from the subsidy account into the financing account as the loan is disbursed.
`(e) MODIFICATION- No direct loan agreement may be modified in a ma nner that increases the cost to the Government (except modifications within the terms of the loan contract that had already been included in calculating the cos t to the Government at the time the agreement was entered into) unless the added cost to the Government is appropriated, obligated out of existing subsidy appro priations, or, in the case of entitlement accounts, charged against the 302(a) a nd 302(b) allocations of the committee making the modification. In calculating t he costs of altering a direct loan the calculation shall include the current est imates of the direct loan's present value.

`(f) ELIGIBILITY AND ASSISTANCE- Nothing in this title shall be con strued to change the authority or the responsibility of a Federal agency to dete rmine the terms and conditions of eligibility for, or the amount of assistance p rovided by a direct loan.

`LOAN GUARANTEE PROGRAMS

`SEC. 1105. (a) AGENCY BUDGET PROPOSAL- For each fiscal year, begin ning with fiscal year 1992, each Federal agency authorized to make loan guarante e commitments shall include in its budget proposal and submission to Congress--

`(1) the level of new loan guarantee commitments; and

`(2) the estimated cost to the Government associated with the p roposed loan guarantee commitments.

`(b) LOAN GUARANTEE- On or after October 1, 1991, a Federal agency shall not guarantee a loan unless--

`(1) an appropriation has been made to the Federal agency for t he cost to the Government, or

`(2) a limitation is enacted in an annual appropriations Act on the use of funds otherwise available to the Federal agency for the cost to the Government.

`(c) COST TO THE GOVERNMENT OF LOAN GUARANTEE-

`(1) IN GENERAL- At the time a loan guarantee commitment is mad e, the Federal agency shall obtain an estimate of the cost to the Government of the loan guarantee from the Director or, at the discretion of the Director, shal l make an estimate of the cost to the Government based upon guidelines provided by the Director.

`(2) OBLIGATION- The amount of an estimate made under paragraph (1) shall constitute an obligation of the Federal agency for the purposes of se ction 1501 of title 31, United States Code.

`(d) PAYMENT OF COST TO THE GOVERNMENT- The cost to the Government associated with a loan guarantee determined under subsection (c) shall be paid f rom the subsidy account into the financing account at the time the underlying gu aranteed loan is disbursed.

`(e) MODIFICATION- No loan guarantee agreement may be modified in a manner that would increase the cost to the Government (except modifications wit hin the terms of a loan contract that had already been included in calculating t he cost to the Government at the time the agreement was entered into) unless the added cost to the Government is appropriated, obligated out of existing subsidy appropriations, or is charged against the 302(a) and 302(b) allocations of the committee making the modifications. In calculating the costs of modifying loan g uarantee agreements, the calculation shall include the current estimates of the loan guarantee's present value.

`(f) REINSURANCE- Nothing in this title shall be construed as autho rizing or requiring the purchase of reinsurance for a Federal guarantee from pri vate insurers.

`(g) ELIGIBILITY AND ASSISTANCE- Nothing in this title shall be con strued to change the authority or the responsibility of a Federal agency to dete rmine the terms and conditions of eligibility for, or the amount of assistance p rovided by, a loan guarantee.

`AGENCY RESPONSIBILITIES

`SEC. 1106. The head of each Federal agency authorized to make or g uarantee loans covered by this title shall--

`(1) provide the Director in a timely fashion with information about the Federal agency's direct loan or loan guarantee programs sufficient to enable the Director to calculate the estimated cost to the Government, or shall, as required by the Director, estimate the cost to the Government in accordance with the Director's guidance;

`(2) request annual appropriations, or limitations on funds oth erwise available, for the subsidies attributable to that Federal agency's direct loan or loan guarantee programs in each fiscal year;

`(3) carry out the Federal agency's direct loan or loan guarant ee programs within the lesser of--

`(A) applicable appropriations Act limitations on direct lo an obligations or loan guarantee commitments; or

`(B) annual appropriations or funds otherwise available to cover cost to the Government for the program; and

`(4) maintain reserves in a financing account to cover loan gua rantee defaults, which reserves in the financing account shall be treated as uni nvested funds.

`BUDGETARY TREATMENT

`SEC. 1107. (a) DIRECT LOAN COST TO THE GOVERNMENT- For the purpose s of chapter 11 of title 31, United States Code, and of titles III and IV of thi s Act, in the case of any direct loan made by a Federal agency on or after Octob er 1, 1991, the cost to the Government shall be treated as an obligation of the subsidy account. The cost to the Government shall be included in the budget func tion of the direct loan program.

`(b) LOAN GUARANTEE COST TO THE GOVERNMENT- For the purposes of cha pter 11 of title 31, United States Code, and of titles III and IV of this Act, i n the case of any loan guarantee commitment made by a Federal agency on or after October 1, 1991, the cost to the Government shall be treated as an obligation o f the account charged with the subsidy payment. The cost to the Government shall be included in the budget function of the guaranteed loan program.

`(c) CREDIT FINANCING ACTIVITIES-

`(1) For the purposes of chapter 11 of title 31, United States Code, and of titles III and IV of this Act, financing requirements of Federal cr edit programs in excess of costs to the Government paid by a Federal agency shal l be chargeable to a financing account for each program. Financing requirements of direct loans or loan guarantees made or obligated on or after October 1, 1991 , shall also be treated as obligations of the financing accounts. Such financing transactions shall be recorded in a budget function entitled `credit financing activities'. The Antideficiency Act shall apply to the financing accounts.< /ul>

`(2) Amounts recorded in the budget function entitled `credit f inancing activities' pursuant to this subsection shall not be included--

`(A) for purposes of determining, in accordance with sectio ns 301(i) and 311(a) of this Act, whether the maximum deficit amount for a fisca l year has been exceeded;

`(B) for purposes of other points of order under section 31 1 of this Act;

`(C) for purposes of reconciliation under section 310 of th is Act; or

`(D) for purposes of allocations and points of order under section 302 of this Act.

`(3) Transactions in the financing account shall be treated as a means of financing of the Government.

`AUTHORIZATION OF APPROPRIATIONS

`SEC. 1108. (a) DIRECT LOAN OBLIGATIONS- There are authorized to be appropriated to each Federal agency otherwise authorized to make obligations fo r direct loans, such sums as may be necessary to pay the cost to the Government associated with proposed direct loan obligations and the costs of administering direct loans.

`(b) LOAN GUARANTEE COMMITMENTS- There are authorized to be appropr iated to each Federal agency otherwise authorized to make guaranteed loan commit ments, such sums as may be necessary to pay the cost to the Government associate d with proposed loan guarantee commitments and the costs of administering loan g uarantees.

`(c) TREASURY NOTES FINANCING- If at any time the monies available in its financing account are insufficient to enable the head of the Federal agen cy to discharge its responsibilities under this title, the head of a Federal age ncy shall issue to the Secretary of the Treasury notes or other obligations in s uch forms and denominations, bearing such maturities, and containing such terms and conditions, as may be prescribed by the Secretary of the Treasury. Redemptio n of such notes or obligations shall be made by the head of such agency from mon ies otherwise available to its financing account or from appropriations made pur suant to subsection (d). Such notes or other obligations shall bear interest at a rate determined by the Secretary of the Treasury, which shall not be less than the average market yield on outstanding marketable obligations of the United St ates of comparable maturities during the month preceding the date of issuance of such notes or other obligations. The Secretary of the Treasury shall purchase a ny notes or other obligations issued under this subsection and for that purpose the Secretary of the Treasury is authorized to use as a public debt transaction the proceeds from the sale of any securities issued under the Second Liberty Bon d Act, and the purposes for which securities may be issued under that Act are ex tended to include any purchase of such notes or obligations.

`(d) LIQUIDATING OBLIGATIONS-

`(1) If funds are insufficient to liquidate obligations of the financing account incurred under subsection (c), for the purposes of titles III and IV of this Act, the Director or the Federal agency as designated by the Dire ctor shall estimate the level of funds needed to meet those obligations. If at a ny time it is determined that funds are insufficient to repay those obligations, under subsection (c), there are authorized to be appropriated such sums as are necessary to repay those obligations.

`(2) To the extent that the resources of the financing account exceed those needed to liquidate obligations of the account or to maintain actua rially determined reserve requirements, the excess funds shall be transferred to the general fund of the Treasury. Such transfers shall be made from time to tim e, but at least once a year.

`(3) The Director shall include detailed descriptions of the fi nancial condition of the financing accounts in the President's annual budget sub mission under section 1105 of title 31 of the United States Code.

`(e) AUTHORIZATION OF APPROPRIATIONS FOR SALARIES AND EXPENSES- The re are authorized to be appropriated to the Director such sums as may be necessa ry for the salaries and expenses incurred to carry out the responsibilities of t he Director under this title.

`TREATMENT OF DEPOSIT INSURANCE AND AGENCIES AND OTHER INSURANCE PROG RAMS

`SEC. 1109. (a) IN GENERAL-

`(1) The provisions of this title shall not apply to the credit and insurance activities of the credit activities of the Federal Deposit Insura nce Corporation, National Credit Union Administration, Resolution Trust Corporat ion, Pension Benefit Guaranty Corporation, National Flood Insurance, Insurance D evelopment Fund, Crop Insurance, or to the credit or other activities of the Ten nessee Valley Authority.

`(2) The Director of the Office of Management and Budget and th e Director of the Congressional Budget Office shall each study whether the accou nting for Federal insurance programs, including deposit insurance programs, shou ld be on a cash basis. Each Director shall report findings and recommendations t o the President and the Congress by September 30, 1991.

`(3) For the purposes of paragraph (2) the Office of Management and Budget and the Congressional Budget Office shall have access to all agency data that may facilitate these studies.

`(b) ELIGIBILITY AND ASSISTANCE- Nothing in this section shall be c onstrued to change the responsibility of the entities that administer the progra ms described in subsection (a) to determine the terms and conditions of eligibil ity for, or the amount of assistance provided by those entities.

`EFFECT ON OTHER LAWS

`SEC. 1110. (a) FEDERAL AGENCY AUTHORITY- Nothing in this title sha ll be construed as limiting the authority of any Federal agency to enter into ag reements to make or to guarantee loans under statutes that were in effect prior to the date of enactment of this title or that may be enacted subsequently. All such agreements shall be contingent upon meeting the requirements of this title.

`(b) EFFECT ON OTHER LAWS- This title shall supersede, modify, or r epeal any provision of law enacted prior to the date of enactment of this title to the extent such provision is inconsistent with this title. Nothing in this ti tle shall be construed to establish a credit limitation on any Federal loan or l oan guarantee program.

`(c) CREDITING OF COLLECTIONS- Collections resulting from direct lo ans obligated or loan guarantees committed prior to October 1, 1991, shall be cr edited to the liquidating accounts of Federal agencies. Amounts so credited shal l be available, to the same extent that they were available prior to the date of enactment of this title, to liquidate obligations arising from such direct loan s obligated or loan guarantees committed prior to October 1, 1991, including rep ayment of any obligations held by the Secretary of the Treasury or the Federal F inancing Bank. The unobligated balances of such accounts that are in excess of c urrent needs shall be transferred to the general fund of the Treasury. Such tran sfers shall be made from time to time but, at least once each year.

`IMPLEMENTATION FOR FISCAL YEAR 1992

`SEC. 1111. (a) IN GENERAL- Beginning with the President's budget s ubmission to Congress for fiscal year 1992, the President shall include, in the Budget Appendix, an estimate for the cost to the Government, as defined in secti on 1102(6), of all Federal direct loan and loan guarantee authority by program a nd by account.

`(b) BUDGET COMMITTEES- At the time of the President's budget submi ssion to Congress, the Director shall provide the Committees on the Budget of bo th the Senate and the House of Representatives and the Congressional Budget Offi ce with a document explaining the methodology used in development of the Directo r's cost to the Government estimates for direct loan and loan guarantee programs . Upon request by the Committees on the Budget of both the Senate or the House o f Representatives or the Congressional Budget Office, the Director shall provide additional documentation, as required, regarding the cost to the Government est imates included in the Budget Appendix.

`(c) CONGRESSIONAL BUDGET OFFICE-

`(1) IN GENERAL- Beginning on January 1, 1991, the Congressiona l Budget Office shall include a cost to the Government estimate of direct loan o r loan guarantee authority provided for in all reported bills.

`(2) EXISTING RESPONSIBILITY- Paragraph (1) does not eliminate or modify any responsibility of the Congressional Budget Office to make cost est imates under the law in effect prior to the effective date of this title.'.

SEC. 12252. EFFECT ON CONGRESSIONAL BUDGET ACT AND CONFORMING AMENDME NTS.

(a) DEFINITIONS- (1) Section 3(2) of the Congressional Budget Act o f 1974 is amended by adding at the end thereof the following: `The term includes the cost to the Government for direct loan and loan guarantee programs, as thos e terms are defined by title XI'.

(2) Section 3 of the Congressional Budget Act of 1974 is amended by adding at the end thereof the following:

`(11) GOVERNMENT-SPONSORED ENTERPRISE- The term `government-sponsor ed enterprise' means a corporate entity created by a law of the United States th at--

`(A)(i) is a Federally chartered organization as provided in st atute;

`(ii) is privately owned, as evidenced by capital stock owned b y private entities or individuals;

`(iii) is under the direction of a board of directors, a majori ty of which is elected by private owners;

`(iv) is a financial institution with power to--

`(I) make loans or loan guarantees for limited purposes suc h as to provide credit for specific borrowers or one sector; and
< /ul>
`(II) raise funds by borrowing or to guarantee the debt of others in unlimited amounts; and

`(B)(i) does not exercise powers that are reserved to the Gover nment as sovereign (such as the power to tax, to levy compulsory fees, regardles s of whether such fees are to finance goods or services, or to regulate intersta te commerce);

`(ii) does not have the power to commit the Government financia lly (but it may be a recipient of a loan guarantee commitment made by the Govern ment); and

`(iii) has employees whose salaries and expenses are paid by th e enterprise and are not Federal employees subject to title 5 of the United Stat es Code.'.

(b) POINT OF ORDER- Section 402 of the Congressional Budget Act of 1974 is amended--

(1) by redesignating subsection (b) as (c);

(2) in subsection (a), by striking `(b)(1)' and inserting `(c)' ; and

(3) by inserting after subsection (a) the following new subsect ion:

`(b) POINT OF ORDER- It shall not be in order in either the Senate or the House of Representatives to consider any appropriation bill or joint reso lution providing continuing appropriations, or authorizing legislation creating or modifying credit programs that are not subject to appropriation of credit aut hority, or any amendment thereto, or any conference report thereon, or any motio n in relation thereto, that provides new credit authority that does not also pro vide an appropriation for the cost to the Government of such new credit authorit y as required by title XI.'.

(c) POINT OF ORDER FOR FISCAL YEAR 1991- Section 302(f)(2) of the C ongressional Budget Act of 1974 is amended by inserting after `new budget author ity' the following: `or new credit authority'. The amendment made by this subsec tion shall take effect on January 1, 1991.

(d) SUNSET OF POINT OF ORDER IN FISCAL YEAR 1992- (1) Section 302 o f the Congressional Budget Act is amended--

(A) in subsection (a)(1)--

(i) by striking `total entitlement authority, and total cre dit authority' and inserting `and total entitlement authority';

(ii) by striking `such entitlement authority, or such credi t authority' and inserting `or such entitlement authority'; and

(iii) by striking `entitlement authority, and credit author ity' and inserting `and entitlement authority';

(B) in subsection (a)(2), by striking `total budget outlays, to tal new budget authority and new credit authority' and inserting `total budget o utlays and total new budget authority';

(C) in subsection (b)(1)(A), by striking `budget outlays, new b udget authority, and new credit authority' and inserting `budget outlays and new budget authority';

(D) in subsection (c)--

(i) in paragraph (1), by inserting `or' at the end thereof; and

(ii) by striking `or (3) new credit authority for a fiscal year;'; and

(E) in subsection (f)(1)--

(i) by striking `year, new entitlement authority effective during such fiscal year, or new credit authority for such fiscal year,' and inse rting `year or new entitlement authority effective during such fiscal year,'; an d

(ii) by striking `authority, new entitlement authority, or new credit authority' and inserting `authority or new entitlement authority'.

(2) The amendments made by this subsection shall take effect for fi scal years beginning after September 30, 1991.

(e) BALANCED BUDGET ACT- Section 255(g) of the Balanced Budget and Emergency Deficit Control Act of 1985 is amended by adding at the end thereof th e following new paragraph:

`(3) The financing account or accounts (as defined by section 1 102(8)) and the activities of those accounts shall be exempt from reduction unde r any order issued pursuant to this part, except to the extent that a reduction in subsidies or loan limitations would result in a reduction in the financing am ount or amounts.'.

SEC. 12253. TABLE OF CONTENTS.

The table of contents for the Congressional Budget and Impoundment Control Act of 1974 is amended by adding at the end thereof the following:< /ul>
`TITLE XI--CREDIT REFORM

`Sec. 1100. Short title.

`Sec. 1101. Purposes.

`Sec. 1102. Definitions.

`Sec. 1103. OMB and CBO analysis, coordination, and review.< /ul>

`Sec. 1104. Direct loan programs.

`Sec. 1105. Loan guarantee programs.

`Sec. 1106. Agency responsibilities.

`Sec. 1107. Budgetary treatment.

`Sec. 1108. Authorization of appropriations.

`Sec. 1109. Treatment of deposit insurance agencies.

`Sec. 1110. Effect on other laws.

`Sec. 1111. Implementation for fiscal year 1992.'.

SEC. 12254. GOVERNMENT-SPONSORED ENTERPRISES.

(a) TREASURY REPORT-

(1) On or before April 30, 1991, the Secretary of the Treasury shall submit to the Senate and the House of Representatives a report--

(A) making an objective assessment of the financial safety and soundness of the Government-sponsored enterprises;

(B) assessing the adequacy of the existing regulatory struc ture for Government-sponsored enterprises; and

(C) assessing the risk of financial exposure to the Federal Government posed by Government sponsored enterprises.

(2)(A) Each Government-sponsored enterprise shall provide full and prompt access to the Secretary to its books and records, and shall promptly provide any other information requested by the Secretary.

(B) In conducting the studies under this section, the Secretary may request information from, or the assistance of, any Federal department or a gency authorized by law to supervise the activities of any Government-sponsored enterprise.

(C)(i) The Secretary shall determine and maintain the confident iality of any book, record, or information made available under this section in a manner generally consistent with the level of confidentiality established for the material by the Government-sponsored enterprise involved.

(ii) The Department of Treasury shall be exempt from section 55 2 of title 5, United States Code, with respect to any book, record, or informati on made available under this section and determined by the Secretary to be confi dential. This exemption shall continue to apply to any such book, record, or inf ormation provided to a nationally recognized rating organization or another Fede ral agency.

(iii) Any officer of employee of the Department of the Treasury shall be subject to the penalties set forth in section 1906 of title 18, United States Code, if--

(I) by virtue of this employment of official position, he h as possession of or access to any book, record, or information made available un der this section and determined by the Secretary to be confidential under clause (i); and

(II) he discloses the material in any manner other than--

(aa) to an officer or employee of the Department of Tre asury; or

(bb) pursuant to the exception set forth in such sectio n 1906.

(b) CONGRESSIONAL BUDGET OFFICE REPORT-

(1) On or before April 30, 1991, the Director of the Congressio nal Budget Office shall submit to the Senate and the House of Representatives a report--

(A) giving that Office's perspective on--

(i) the types of risk that each Government-sponsored en terprise assumes;

(ii) ways in which the Congress can improve its underst anding of these risks; and

(iii) the risks to the budget posed by Government-spons ored enterprises;

(B) evaluating the adequacy of current Government-sponsored enterprise supervision and regulation with respect to risk management; and

(C) presenting alternative models of oversight, with partic ular emphasis on the costs and benefits of each alternative on the Federal Gover nment and to Government-sponsored-enterprise-supported beneficiaries.
< /ul>

(2)(A) The Director of Congressional Budget Office shall determ ine and maintain the confidentiality of any book, record, or information made av ailable under this subsection in a manner generally consistent with the level of confidentiality established for the material by the Government-sponsored enterp rise involved.

(B) The Congressional Budget Office shall be exempt from sectio n 603 of title 2, United States Code, with respect to any book, record, or infor mation made available under this subsection and determined by the Director to be confidential under subparagraph (A).

(c) STUDY AND LEGISLATION- It is the sense of Congress that the Com mittees of jurisdiction over Government-sponsored enterprises in the Senate and the House of Representatives shall--

(1) study the administration's Government sponsored enterprise proposals, which include--

(A) requiring triple-A ratings for Government-sponsored ent erprises;

(B) establishing the Department of the Treasury as a separa te regulator of Government-sponsored enterprises for safety and soundness; and

(C) imposing regulatory sanctions on Government-sponsored e nterprises that fail to achieve a triple-A rating within 5 years;

(2) consult with the administration, the Government-sponsored e nterprises, and the Congressional Budget Office regarding the administration's p roposals; and

(3) report by September 15, 1991, to the Senate or the House of Representatives, as the case may be, as appropriate, legislation to--

(A) ensure the financial soundness of Government-sponsored enterprises; and

(B) minimize the possibility that any Government-sponsored enterprise might require future Federal assistance.

(d) LEGISLATIVE CONSIDERATION- It is the sense of Congress that if the Committees of jurisdiction over Government-sponsored enterprises in the Sena te and the House of Representatives fail to report the legislation required by s ubsection (c) by September 15, 1991, then the Leadership of the Senate and the H ouse of Representatives shall provide for consideration of and a vote on or in r elation to legislation improving the financial safety and soundness of Governmen t-sponsored enterprises before the end of the First Session of the 102nd Congres s.

Subtitle F--Budget Timetable

SEC. 12301. BUDGET TIMETABLE.

Section 300 of the Congressional Budget Act of 1974 is amended to r ead as follows:

`TIMETABLE

`SEC. 300. (a) IN GENERAL- Except as provided in subsection (b), th e timetable for the Congressional budget process is as follows:

`On or before:
Action to be completed:

January 27

Congressional Budget Office submits its baseline report to Budget Committ ees and issues its initial Gramm-Rudman-Hollings report to Office of Management and Budget and the Congress.
February 1

President submits the executive branch's budget request. Office of Manage ment and Budget issues its initial report to the President and the Congress. Pre sident issues initial order and transmits to the Congress a detailed message reg arding the initial order.
March 1

Congressional Budget Office submits its reestimate of the President's bud get to the Committees on Appropriations and on the Budget request and committees submit their views and estimates to Budget Committees.
April 1

Senate Budget Committee reports concurrent resolution on the budget.
April 15

Congress completes action on concurrent resolution on the budget.
May 15

Annual Appropriations bills may be considered in the House.
September 30

Congress completes action on appropriations legislation and completes act ion on reconciliation legislation in odd-numbered years.
October 1

Fiscal year begins and any initial order becomes effective.
November 10

Congressional Budget Office issues its revised report to Office of Manage ment and Budget and the Congress.
November 15

Office of Management and Budget issues its revised report to the Presiden t and the Congress. President issues final order (which becomes effective immedi ately).
November 30

President transmits to the Congress a detailed message regarding the fina l order.
December 15

Comptroller General issues compliance report.
`(b) IN YEARS A NEW PRESIDENT TAKES OFFICE- In years in which a new President (who had not been President on January 19) takes office on January 20 , the timetable for the Congressional budget process is as follows:

`On or before:
Action to be completed:

January 27

Congressional Budget Office submits its baseline report to Budget Committ ees.
March 10

Congressional Budget Office issues its initial Gramm-Rudman-Hollings repo rt to Office of Management and Budget and the Congress.
March 15

President submits the executive branch's budget request. Office of Manage ment and Budget issues its initial report to the President and the Congress. Pre sident issues initial order and transmits to the Congress a detailed message reg arding the initial order.
April 15

Congressional Budget Office submits its reestimate of the President's bud get to the Committees on Appropriations and on the Budget request and committees submit their views and estimates to Budget Committees.
May 1

Senate Budget Committee reports concurrent resolution on the budget.
May 15

Congress completes action on concurrent resolution on the budget.
June 1

Annual Appropriations bills may be considered in the House.
September 30

Congress completes action on appropriations legislation and completes act ion on reconciliation legislation.
October 1

Fiscal year begins and any initial order becomes effective.
November 10

Congressional Budget Office issues its revised report to Office of Manage ment and Budget and the Congress.
November 15

Office of Management and Budget issues its revised report to the Presiden t and the Congress. President issues final order (which becomes effective immedi ately).
November 30

President transmits to Congress a detailed message regarding the final or der.
December 15

Comptroller General issues compliance report.'.
Subtitle G--Early Initial Gramm-Rudman-Hollings Reports

SEC. 12351. EARLY INITIAL GRAMM-RUDMAN-HOLLINGS REPORTS.

(a) GRAMM-RUDMAN-HOLLINGS- The Balanced Budget and Emergency Defici t Control Act of 1985 is amended--

(1) in section 251(a)(1)(A), by striking `as of August 15 of th e calendar year in which such fiscal year begins';

(2) in section 251(a)(2)(A), by striking `August 20' and insert ing `January 27';

(3) in section 251(a)(2)(B), by striking `August 25' and insert ing `February 1';

(4) in section 251(a)(2)(C), by striking clauses (iii) and (iv) ;

(5) in section 251(a)(3)(A)(ii), by striking `paragraph' and in serting `part';

(6) in section 251(a)(3)(A)(ii)(II), by striking `in the case o f an initial report submitted under subsection (a), August 15, and in the case o f a final report submitted under subsection (c),';

(7) in section 251(c)(1)(A), by striking `August 15 of' and ins erting `the snapshot date for the Director's report pursuant to subsection (a) f or';

(8) in section 252(a)(1), by striking `August 25' and inserting `February 1';

(9) in section 252(a)(5), by striking `Not later than the 15th day beginning after the President issues an' and inserting `Along with any'; and

(10) in section 252(b)(2), by striking `August 15 of' and inser ting `the snapshot date for the Director's report pursuant to section 251(a) for '.

(b) CONGRESSIONAL BUDGET ACT- The Congressional Budget Act of 1974 is amended--

(1) in section 202(f)(1), by striking `February 15' and inserti ng `January 27';

(2) in section 202(f)(1), by striking `and any changes in such levels based on proposals in the budget request submitted by the President for s uch fiscal year';

(3) in section 202(f), by adding at the end thereof the followi ng new paragraph:

`(4) On or before March 1 of each year (or April 15 of a year t o which section 300(b) applies), the Director shall submit to the Committees on the Budget of the Senate and the House of Representatives a report setting forth the Director's analysis of the proposals in the budget request submitted by the President for the fiscal year beginning October 1 of that year.'; and

(4) in section 301(d), by striking `February 25' and inserting `March 1'.

(c) TITLE 31 OF THE UNITED STATES CODE- Section 1105(a) of title 31 , United States Code, is amended by striking `the first Monday after January 3' and inserting `February 1'.

SEC. 12352. PRESIDENTS' BUDGET REQUEST TO USE GRAMM-RUDMAN-HOLLINGS R ULES.

Section 1105(f) of title 31, United States Code, is amended--< /ul>
(1) in paragraph (1) by inserting before the period `(and as re vised on the date of that budget under section 251(a)(1)(E) of the Balanced Budg et and Emergency Deficit Control Act of 1985) using budget estimates made in acc ordance with section 251(a)(6) of that Act';

(2) in paragraph (2) by inserting before the comma `(and as rev ised on the date of that budget under section 251(a)(1)(E) of the Balanced Budge t and Emergency Deficit Control Act of 1985) using budget estimates made in acco rdance with section 251(a)(6) of that Act'; and

(3) by striking paragraphs (3) and (4) and redesignating paragr aph (5) as paragraph (3).

Subtitle H--Strengthening the Byrd Rule on Extraneous Matter in Recon ciliation

SEC. 12401. STRENGTHENING THE BYRD RULE.

(a) STRENGTHENING THE BYRD RULE- Section 20001 of the Consolidated Omnibus Budget Reconciliation Act of 1985 is amended--

(1) in subsection (a)--

(A) by inserting after `(a)' the following: `IN GENERAL- ';

(B) by inserting after `1974' the following: `(whether that bill or resolution originated in the Senate or the House) or section 254(a) of the Balanced Budget and Emergency Deficit Control Act of 1985';

(2) in subsection (d) by inserting after `(d)' the following: ` EXTRANEOUS PROVISIONS- ';

(3) in subsection (d)(1)(A) by inserting before the semicolon ` (but a provision in which outlay decreases or revenue increases exactly offset o utlay increases or revenue decreases shall not be considered extraneous by virtu e of this subparagraph)';

(4) in subsection (d)(1)(D) by striking `and' after the semicol on;

(5) in subsection (d)(1)(E), by striking the period at the end thereof and inserting `; and';

(6) in subsection (d)(1) by adding at the end thereof the follo wing new subparagraph:

`(F) a provision shall be considered extraneous if it viola tes section 310(f).';

(7) in subsection (d)(2), by inserting after `A' the first plac e it appears the following: `Senate-originated'; and

(8) by adding at the end thereof the following new subsections:

`(e) EXTRANEOUS MATERIALS- Upon the reporting or discharge of a rec onciliation bill or resolution pursuant to section 310 in the Senate, and again upon the submission of a conference report on such a reconciliation bill or reso lution, the Committee on the Budget of the Senate shall submit for the record a list of material considered to be extraneous under subsections (b)(1)(A), (b)(1) (B), and (b)(1)(E) of this section to the instructions of a committee as provide d in this section. The inclusion or exclusion of a provision shall not constitut e a determination of extraneousness by the Presiding Officer of the Senate.

`(f) GENERAL POINT OF ORDER- Notwithstanding any other law or rule of the Senate, it shall be in order for a Senator to raise a single point of ord er that several provisions of a bill, resolution, amendment, motion, or conferen ce report violate this section. The Presiding Officer may sustain the point of o rder as to some or all of the provisions against which the Senator raised the po int of order. If the Presiding Officer so sustains the point of order as to some of the provisions (including provisions of an amendment, motion, or conference report) against which the Senator raised the point of order, then only those pro visions (including provisions of an amendment, motion, or conference report) aga inst which the Presiding Officer sustains the point of order shall be deemed str icken pursuant to this section. Before the Presiding Officer rules on such a poi nt of order, any Senator may move to waive such a point of order as it applies t o some or all of the provisions against which the point of order was raised. Suc h a motion to waive is amendable in accordance with the rules and precedents of the Senate. After the Presiding Officer rules on such a point of order, any Sena tor may appeal the ruling of the Presiding Officer on such a point of order as i t applies to some or all of the provisions on which the Presiding Officer ruled.

`(g) DETERMINATION OF LEVELS- For purposes of this section, the lev els of new budget authority, budget outlays, new entitlement authority, and reve nues for a fiscal year shall be determined on the basis of estimates made by the Committee on the Budget of the Senate.'.

(b) TRANSFER OF BYRD RULE- (1) Section 20001 of the Consolidated Om nibus Budget Reconciliation Act of 1985, as amended by subsection (a), is transf erred to the end of part A of title III of the Congressional Budget Control Act of 1974, and designated as section 313 of that Act.

(2) Section 313 of the Congressional Budget Control Act of 1974 is amended by--

(A) adding at the beginning thereof the following center headin g:

`EXTRANEOUS MATTER IN RECONCILIATION LEGISLATION';

(B) striking subsection (b), subsection (c), and the last sente nce of subsection (a); and

(C) redesignating subsections (d) (e), (f), and (g) as subsecti ons (b), (c), (d) and (e), respectively.

(3) Subsection (a) of the first section of Senate Resolution 286 (9 9th Congress, 1st Session), as amended by Senate Resolution 509 (99th Congress, 2d Session) is enacted as subsection (c) of section 313 of the Congressional Bud get Act of 1974.

(4) Section 313 of the Congressional Budget Act of 1974 is amended- -

(A) in subsections (a), (b)(1)(A), and (c), by striking `of the Congressional Budget Act of 1974';

(B) in subsection (a), by striking `(d)' and inserting `(b)';

(C) in subsection (b)(2)(C), by adding `or' at the end thereof;

(D) in subsection (c), by striking `when' and inserting `When';

(E) in subsection (c)(1), by striking `(d)(1)(A) or (d)(1)(D) o f section 20001 of the Consolidated Omnibus Budget Reconciliation Act of 1985' a nd inserting `(b)(1)(A), (b)(1)(B), (b)(1)(D), (b)(1)(E), or (b)(1)(F)'; and

(F) in subsection (c)(2), by striking `this resolution' and ins erting `this subsection'.

(5) The table of contents for the Congressional Budget and Impoundm ent Control Act of 1974 is amended by adding after the item for section 312 (as added by section 12606(c)) the following new item:

`Sec. 313. Extraneous matter in reconciliation legislation.'.

Subtitle I--Budget Submissions in New Administrations

SEC. 12451. REQUIREMENT FOR NEW PRESIDENT'S BUDGETS.

Section 1105(a) of title 31, United States Code, is amended by stri king `February 5 in 1986' and inserting `March 15 in any year in which a new Pre sident takes office on January 20, not having been President on January 19'.

SEC. 12452. DEADLINES IN YEARS WHEN A NEW PRESIDENT TAKES OFFICE.

(a) CONGRESSIONAL BUDGET ACT- The Congressional Budget Act of 1974 is amended--

(1) in section 301(a), by inserting after `April 15 of each yea r' the following: `(or May 15 in a year to which section 300(b) applies';

(2) in section 301(d), by striking `February 25 of each year' a nd inserting `March 1 of each year (or April 15 in a year to which section 300(b ) applies'; and

(3) in section 303(b), by inserting after `May 15 of any calend ar year' the following: `(or June 1 in a year to which section 300(b) applies'.

(b) BALANCED BUDGET AND EMERGENCY DEFICIT CONTROL ACT OF 1985- The Balanced Budget and Emergency Deficit Control Act of 1985 is amended--

(1) in section 251(a)(2)(A), by striking `October 15, 1987, in the case of fiscal year 1988' and inserting `March 10 in a year to which section 300(b) of the Congressional Budget Act of 1974 applies';

(2) in section 251(a)(2)(B), by striking `October 20, 1987, in the case of fiscal year 1988' and inserting `March 15 in years when section 300( b) of the Congressional Budget Act of 1974 is in effect'; and

(3) in section 252(a)(1), by striking `October 20, 1987, in the case of the fiscal year 1988' and inserting `March 15 in a year to which sectio n 300(b) of the Congressional Budget Act of 1974 applies'.

Subtitle J--Repeal of Superseded Deadlines

SEC. 12501. SUPERSEDED DEADLINES AND CONFORMING CHANGES.

(a) IN GENERAL- The Congressional Budget Act of 1974 is amended--

(1) in section 305, by--

(A) striking subsection (d); and

(B) redesignating subsection (e) as subsection (d);

(2) by repealing section 307; and

(3) in section 310, by--

(A) striking subsection (f); and

(B) redesignating subsection (g) as subsection (f).

(b) AMENDMENT TO TABLE OF CONTENTS- The table of contents for the C ongressional Budget and Impoundment Control Act of 1974 is amended by striking t he item for section 307 and inserting the following:

`Sec. 307. Repealed.'.

Subtitle K--Standardization of Points of Order

SEC. 12551. STANDARDIZATION OF LANGUAGE REGARDING POINTS OF ORDER.

(a) IN GENERAL- The Congressional Budget and Impoundment Control Ac t of 1974 is amended--

(1) in section 311(a)--

(A) in the matter before paragraph (1), by striking `provid ing new budget authority for such fiscal year, providing new entitlement authori ty effective during such fiscal year, or reducing revenues for such fiscal year, '; and

(B) by striking `, if--' and paragraphs (1), (2), and (3) a nd inserting `that';

(2)(A) in section 302(c), by striking `bill or resolution, or a mendment thereto' and inserting `bill, resolution, amendment, motion, or confere nce report';

(B) in section 302(f)(2), by striking `bill or resolution (incl uding a conference report thereon), or any amendment to a bill or resolution' an d inserting `bill, resolution, amendment, motion, or conference report';

(C) in section 303(a), by striking `bill or resolution (or amen dment thereto)' and inserting `bill, resolution, amendment, motion, or conferenc e report';

(D) in section 306, by striking `bill or resolution, and no ame ndment to any bill or resolution' and inserting `bill, resolution, amendment, mo tion, or conference report';

(E) in section 311(a), by--

(i) striking `bill, resolution, or amendment' and inserting `bill, resolution, amendment, motion, or conference report'; and

(ii) striking `or any conference report on any such bill or resolution';

(F) in section 401(a), by--

(i) striking `bill, resolution, or conference report' and i nserting `bill, resolution, amendment, motion, or conference report'; and

(ii) striking `(or any amendment which provides such new sp ending authority)';

(G) in section 401(b)(1), by--

(i) striking `bill or resolution' and inserting `bill, reso lution, resolution of ratification, amendment, motion, or conference report'; an d

(ii) striking `(or any amendment which provides such new sp ending authority)'; and

(H) in section 402(a), by--

(i) striking `bill, resolution, or conference report' and i nserting `bill, resolution, amendment, motion, or conference report'; and

(ii) striking `or any amendment';

(3) in section 302(f)(2), by striking `outlays or new budget au thority' and inserting `outlays, new budget authority, or new spending authority (as defined in section 401(c)(2))';

(4) in section 303(a), by--

(A) amending paragraph (4) to read as follows:

`(4) new spending authority (as defined in section 401(c)(2)) f or a fiscal year;';

(B) striking the comma at the end of paragraph (5) and inse rting `; or'; and

(C) adding at the end thereof the following new paragraph:

`(6) outlays,';

(5) in section 401(a), by striking `(A) or (B)' both times it a ppears and inserting `(A), (B), or (D)';

(6) in section 401(c), by striking the last sentence;

(7) in section 401(d), by striking `Subsections (a) and' and in serting `Subsection'; and

(8) in section 402(b), by inserting after `including' the follo wing: `(but not limited to)'.

(b) POINTS OF ORDER AGAINST AMENDMENTS BETWEEN THE HOUSES-
(1) Part A of title III of the Congressional Budget Act of 1974 as amended by section 12401(b), is amended by adding at the end thereof the fol lowing new section:

`EFFECTS OF POINTS OF ORDER

`SEC. 314. POINTS OF ORDER AGAINST AMENDMENTS BETWEEN THE HOUSES- E ach provision of this Act that establishes a point of order against an amendment also establishes a point of order against an amendment between the Houses. If a point of order under this Act is raised in one House against an amendment betwe en the Houses, and the Presiding Officer sustains the point of order, the effect shall be the same as if that House had disagreed to the amendment.

`(b) EFFECT OF A POINT OF ORDER ON A BILL IN THE SENATE- In the Sen ate, if the Chair sustains a point of order against a bill, the Chair shall then send the bill to the committee of appropriate jurisdiction for further consider ation.'.

(2) The table of contents for the Congressional Budget and Impo undment Control Act of 1974 is amended by adding after the item for section 313 (as added by section 12401(b)(5)) the following new item:

`Sec. 314. Effect of points of order.'.

(c) ADJUSTMENT OF ALLOCATIONS AND AGGREGATES TO REFLECT CHANGES PUR SUANT TO SECTION 310(c)- Section 310(c) of the Congressional Budget Act of 1974 is amended by--

(1) inserting `(1)' before `Any committee';

(2) redesignating subparagraphs (A) and (B) of paragraph (1) as clauses (i) and (ii), respectively;

(3) redesignating paragraphs (1) and (2) as subparagraphs (A) a nd (B), respectively; and

(4) inserting at the end thereof the following new paragraph:

`(2)(A) Upon the reporting to the Committee on the Budget of a recommendation that shall be deemed to have complied with such directions solely by virtue of this subsection, the chairman of the Committee on the Budget may f ile with the reporting committee's House appropriately revised allocations under section 302(a) and revised functional levels and aggregates to carry out this s ubsection.

`(B) Upon the submission to the Senate or the House of a confer ence report recommending a reconciliation bill or resolution in which a committe e shall be deemed to have complied with such directions solely by virtue of this subsection, the chairmen of the Committees on the Budget may file with their re spective Houses appropriately revised allocations under section 302(a) and revis ed functional levels and aggregates to carry out this subsection.

`(C) Allocations, functional levels, and aggregates revised pur suant to this paragraph shall be considered to be allocations, functional levels , and aggregates contained in the concurrent resolution on the budget pursuant t o section 301.

`(D) Upon the filing of revised allocations pursuant to this pa ragraph, the reporting Committee shall report revised allocations pursuant to se ction 302(b) to carry out this subsection.'.

(d) RECONCILIATION INSTRUCTIONS- Section 310(a)(4) of the Congressi onal Budget Act of 1974 is amended by inserting after `(3)' the following: `(inc luding a direction to achieve deficit reduction)'.

SEC. 12552. DEFINITIONS.

(a) BUDGET AUTHORITY- Section 3(2) of the Congressional Budget Act of 1974 is amended to read as follows:

`(12) BUDGET AUTHORITY-

`(A) IN GENERAL- The term `budget authority' means the auth ority provided by Federal law to incur financial obligations, including the foll owing:

`(i) provisions of law that make funds available for ob ligation and expenditure, including the authority to obligate and expend the pro ceeds of offsetting receipts or offsetting collections from the public;

`(ii) borrowing authority, which means authority grante d to a Federal entity to borrow and obligate and expend the borrowed funds, incl uding through the issuance of promissory notes or other monetary credits;

`(iii) contract authority, which means the making of fu nds available for obligation but not for expenditure; and

`(iv) offsetting collections as negative budget authori ty, and the reduction thereof as positive budget authority.
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Such term includes transactions classified as means of financ ing the deficit.

`(B) ESTIMATES OF BUDGET AUTHORITY- Budget authority may be definite (in which statute specifies the numerical amount) or indefinite (and, therefore, subject to estimate), and includes contingent budget authority determ ined to exist.

`(C) LIMITATIONS ON BUDGET AUTHORITY- Any amount that is pr ecluded from obligation in a fiscal year by a provision of law (such as a limita tion or a benefit formula) shall not be budget authority in that year.

`(D) NEW BUDGET AUTHORITY- The term `new budget authority' means, with respect to a fiscal year--

`(i) budget authority that first becomes available for obligation in that year, including budget authority that becomes available in th at year as a result of a reappropriation; or

`(ii) a change in any account in the availability of un obligated balances of budget authority carried over from a prior year, resulting from a provision of law first effective in that year;

and includes a legislated change in the estimated level of new budget authority provided in indefinite amounts by existing law.'.

(b) ENTITLEMENT AUTHORITY- Section 3(9) of the Congressional Budget Act of 1974 is amended to read as follows:

`(19) ENTITLEMENT AUTHORITY-

`(A) The term `entitlement authority' means any provision o f law that has the effect of requiring the Government to make payments (includin g payments to any Government account) regardless of the amount of budget authori ty that may be available to make those payments, including any entitlement autho rity estimated to exist.

`(B) Except as provided in subparagraph (C), if a provision of law that requires the Government to make payments is limited by any other pr ovision of law to the amount available budget authority (by providing pro rata r eductions in payments, changes in eligibility, changes in employment, or through other means), then entitlement authority does not exist.

`(C) For purposes of paragraph (B), subchapter II of chapte r 13 of title 31 of the United States Code shall not be considered a provision o f law that limits entitlement authority to the amount of available budget author ity.

`(D) The term `new entitlement authority' means any legisla tion creating entitlement authority (or altering existing entitlement authority that was enacted before the date of adoption of the most recently agreed-to budg et resolution, and includes legislation that has the effect of changing the esti mated level of entitlement authority created in indefinite amounts of existing l aw.'.

(c) GERMANENESS- Section 305(b)(2) of the Congressional Budget Act of 1974 is amended by inserting after the second sentence the following: `An ame ndment shall not be germane unless it complies with the precedents of the Senate , deals with the same subject matter as the matter to which it is germane, and i s within the same committee jurisdiction as the matter to which it is germane'.

Subtitle L--Codification of Budget Process Provisions

SEC. 12601. GENDER NEUTRALITY.

(a) CONGRESSIONAL BUDGET ACT- The Congressional Budget and Impoundm ent Control Act of 1974 is amended--

(1) in section 201(a)(2), by striking `him' and inserting `the Deputy Director';

(2) in section 201(a)(2), by striking `his fitness to perform h is duties' and inserting `fitness to perform the duties of the office of Directo r';

(3) in section 201(a)(3)--

(A) by striking `his successor' in both places it appears a nd inserting `a successor';

(B) by striking `him' and inserting `that Deputy Director';

(4) in section 201(d)--

(A) by striking `he' and inserting `the Director';

(B) by striking `his duties and functions' and inserting `t he duties and functions of the office of Director';

(5) in section 303(c)(2), by striking `his' and inserting `the minority leader's';

(6) in section 305(b)(2), by striking `his' and inserting `the minority leader's';

(7) in section 305(c)(3), by striking `his' both times it appea rs and inserting `the minority leader's';

(8) in section 305(c)(4), by striking `his' and inserting `the minority leader's';

(9) in section 1012(a)(1), by striking `he' and inserting `the President';

(10) in section 1014(b)(2)(B), by striking `his' and inserting `the Comptroller General's';

(11) in section 1014(c), by striking `him' and inserting `the C omptroller General';

(12) in section 1014(e)(1)(A), by striking `he' and inserting ` the President';

(13) in section 1015(b), by striking `his' and inserting `the C omptroller General's';

(14) in section 1016, by striking `of his own selection' and in serting `that the Comptroller General selects';

(15) in section 1017(d)(2), by striking `his' and inserting `th e minority leader's';

(16) in section 1017(d)(6), by striking `his' both times it app ears and inserting `the minority leader's'; and

(17) in section 1017(d)(7), by striking `his' and inserting `th e minority leader's'.

(b) OMB REPORTS- Section 251(a)(2)(B)(ii) of the Balanced Budget an d Emergency Deficit Control Act of 1985 is amended by striking `his estimate' an d inserting `the estimate of the Director of OMB'.

(c) MILITARY PERSONNEL FLEXIBILITY- Section 251(d)(3)(C) of such Ac t is amended by striking `he' and inserting `the President'.

(d) PROCEDURES IN THE EVENT OF RECESSION- Section 254(a)(4)(C)(iii) of such Act is amended by striking `his' and inserting `the minority leader's'.

SEC. 12602. REPEAL OF OBSOLETE PROVISIONS.

(a) CONGRESSIONAL BUDGET ACT OF 1974- The Congressional Budget Act of 1974 is amended--

(1) in section 301(i)(2), by

(A) striking `(A)';

(B) striking subparagraph (B); and

(C) striking `(C) For purposes of the application of subpar agraph (B), the' and inserting `(3) The';

(2) in section 311(a), by striking `that--' and subparagraph (A ) and (B) through `fiscal year 1989;' and inserting `that exceeds the maximum de ficit amount for such fiscal year under section 3(7),'; and

(3) in section 401(d), by striking paragraph (2) and redesignat ing paragraph (3) as paragraph (2).

(b) GRAMM-RUDMAN-HOLLINGS- The Balanced Budget and Emergency Defici t Control Act of 1985 is amended--

(1) in section 251(a)(1)(A), by striking `(or as of October 10, 1987, in the case of fiscal year 1988)';

(2) in section 251(a)(2)(B)(iii), by striking `except fiscal ye ar 1988)';

(3) in section 251(a)(2)(B)(iv), by striking `(except fiscal ye ar 1988)';

(4) in section 251(a)(2)(B)(iv), by striking the second sentenc e;

(5) in section 251(a)(2)(C)--

(A) by striking clause (iii);

(B) in clause (iv) by striking `For fiscal year 1989 and su bsequent fiscal years, to the extent that the report submitted by the President for such fiscal year' and inserting `To the extent that the report submitted by the President for a fiscal year'; and

(C) by redesignating clause (iv) as clause (iii);

(6) in section 251(a)(3)(A)(i) by--

(A) striking `be--' and subclauses (I) and (II); and

(B) striking `(III) for fiscal year 1990, 1991, 1992, or 19 93,' and inserting `be';

(7) in section 251(a)(3)(A)(i), by striking `The unachieved def icit reduction shall be $23,000,000,000 in the case of fiscal year 1988 and $36, 000,000,000 in the case of fiscal year 1989, minus the net deficit reduction in the budget baseline for such fiscal year, but such unachieved deficit reduction shall not exceed $23,000,000,000 in the case of fiscal year 1988 or $36,000,000, 000 in the case of fiscal year 1989.';

(8) in section 251(a)(3)(A)(ii), by striking `means--(I) for fi scal year 1988, in the case of an initial report submitted under subsection (a), October 10, 1987, and in the case of a final report submitted under subsection (c), the latest possible date before its submission; (II) for fiscal year 1989 a nd subsequent fiscal years,' and inserting `means';

(9) in section 251(a)(6)(D)(i), by--

(A) striking clause (I);

(B) striking `(II) in the case of fiscal year 1989 and subs equent fiscal years--'; and

(C) redesignating divisions (aa) and (bb) as subclauses (I) and (II), respectively;

(10) in section 251(c)(1), by striking `November 15 of fiscal y ear 1988 and on October 10 of subsequent fiscal years,' and inserting `November 10,';

(11) in section 251(c)(1)(A), by striking `(or after October 10 , 1987, in the case of the fiscal year 1988),';

(12) in section 251(c)(2), by striking `November 20 of fiscal y ear 1988 and on October 15 of subsequent fiscal years,' and inserting `November 15,';

(13) in section 251(d)(3)(C), by striking `October 10, 1987, in the case of fiscal year 1988, or';

(14) in section 251(d)(3)(C), by striking `in the case of any s ubsequent fiscal year,';

(15) in section 252(a)(6), by--

(A) striking subparagraph (A); and

(B) striking `(B) FISCAL YEARS 1989-1993- ';

(16) in section 252(a)(6), by striking `the fiscal year 1989 or any subsequent fiscal year' and inserting `any fiscal year';

(17) in section 252(a)(6)(F), by striking `and paid land divers ion payments';

(18) in section 252(b)(1), by striking `(or on November 20, 198 7, in the case of fiscal year 1988)';

(19) in section 252(b)(2), by striking `(or October 10, 1987, i n the case of fiscal year 1988)';

(20) in section 252(c)(2)(D), by striking `November 25, 1987, f or fiscal year 1988 or, in the case of any subsequent fiscal year, before';

(21) in section 253, by striking `(or December 15, 1987, in the case of fiscal year 1988)'; and

(22) in section 254(b)(1)(E), by striking `and for fiscal year 1988 or 1989, exceed the amount of the estimated deficit for such fiscal year ba sed on laws and regulations in effect on January 1 of the calendar year in which such fiscal year begins as measured using the budget baseline specified in sect ion 251(a)(6) of the Balanced Budget and Emergency Deficit Control Act of 1985 m inus $23,000,000,000 for fiscal year 1988 or $36,000,000,000 for fiscal year 198 9;'.

SEC. 12603. STANDARDIZATION OF ADDITIONAL DEFICIT CONTROL PROVISIONS.

(a) Section 904 of the Congressional Budget Act of 1974 is amended- -

(1) by amending subsection (c) to read as follows:

`(c) WAIVER- Sections 305(b)(2), 305(c)(4), 306, 904(c), and 904(d) may be waived or suspended in the Senate only by the affirmative vote of three- fifths of the Members, duly chosen and sworn. Sections 301(i), 302(c), 302(f), 3 04(b), 310(d)(2), 310(f), 311(a), 313 of this Act and sections 252(c)(2)(H)(ii), 252(c)(2)(H)(iv), 252(c)(2)(F)(ii), 252(c)(2)(G)(ii), 254(a)(4)(D), 254(b)(1)(E ), 254(b)(2)(A), and 258(b)(3)(C)(ii) of the Balanced Budget and Emergency Defic it Control Act of 1985 may be waived or suspended in the Senate only by the affi rmative vote of three-fifths of the Members, duly chosen and sworn.'; and
(2) in subsection (d) by inserting at the end thereof the follo wing: `An affirmative vote of three-fifths of the Members of the Senate, duly ch osen and sworn, shall be required in the Senate to sustain an appeal of the ruli ng of the Chair on a point of order raised under sections 305(b)(2), 305(c)(4), 306, 904(c), and 904(d). An affirmative vote of three-fifths of the Members of t he Senate, duly chosen and sworn, shall be required in the Senate to sustain an appeal of the ruling of the Chair on a point of order raised under sections 301( i), 302(c), 302(f), 304(b), 310(d)(2), 310(f), 311(a), 313 of this Act and secti ons 252(c)(2)(H)(ii), 252(c)(2)(H)(iv), 252(c)(2)(F)(ii), 252(c)(2)(G)(ii), 254( a)(4)(D), 254(b)(1)(E), 254(b)(2)(A), 258(b)(3)(C)(ii) of the Balanced Budget an d Emergency Deficit Control Act of 1985'.

(b) Section 275(b) of the Balanced Budget and Emergency Deficit Con trol Act of 1985 is amended--

(1) in subparagraph (C), by striking the final word `and';

(2) in subparagraph (D), by striking the final period and inser ting `; and'; and

(3) by inserting at the end thereof the following new subparagr aph:

`(E) the second sentence of section 904(c) of the Congressi onal Budget and Impoundment Control Act of 1974 and the final sentence of sectio n 904(d) of that Act.'

SEC. 12604. CODIFICATION OF PROVISION REGARDING REVENUE ESTIMATES.

(a) REDESIGNATION- Section 201 of the Congressional Budget Act of 1 974 is amended by redesignating subsection (f) as subsection (g).

(b) TRANSFER- The text of section 273 of the Balanced Budget and Em ergency Deficit Control Act of 1985 is transferred to section 201 of the Congres sional Budget Act of 1974 and is designated as subsection (f)(1).

(c) CONFORMING CHANGES- Section 201(f) of the Congressional Budget Act of 1974 (as redesignated by subsection (b)) is amended by--

(1) striking `this title and the Congressional Budget and Impou ndment Control Act of 1974' and inserting `this Act'; and

(2) inserting `REVENUE ESTIMATES- (1)' before the first sentenc e.

SEC. 12606. CODIFICATION OF RULES REGARDING SAVINGS TRANSFERS BETWEEN FISCAL YEARS.

(a) TRANSFER- The text of section 202 of Public Law 100-119 is tran sferred to the end of part A of title III of the Congressional Budget Control Ac t of 1974 and designated as section 312 of that Act.

(b) STRENGTHENING THE PROHIBITION OF COUNTING YEAR-TO-YEAR SHIFTS- Section 312 of the Congressional Budget Control Act of 1974 is amended to read a s follows:

`PROHIBITION OF COUNTING AS SAVINGS THE TRANSFER OF GOVERNMENT ACTION S FROM ONE YEAR TO ANOTHER

`SEC. 312. Any provision of an appropriations Act, regulation, or a dministrative action that has the effect of transferring an outlay, receipt, or revenue of the United States from one fiscal year to an adjacent fiscal year whe n compared to baseline estimating assumptions (including a law, regulation, or a dministrative action restricting the flow of outlays that would cause such a tra nsfer, such as an outlay cap) shall not be treated as reducing the deficit or pr oducing net deficit reduction in any fiscal year for purposes of this Act or the Balanced Budget and Emergency Deficit Control Act of 1985.'.

(c) TABLE OF CONTENTS- The table of contents for the Congressional Budget and Impoundment Control Act of 1974 is amended by adding after the item f or section 311 the following new item:

`Sec. 312. Prohibition of counting as savings the transfer of Gov ernment actions from one year to another.'.

SEC. 12608. TECHNICAL REVISIONS OF GRAMM-RUDMAN-HOLLINGS.

The Balanced Budget and Emergency Deficit Control Act of 1985 is am ended--

(1) in section 251(a)(6)(B)--

(A) by striking `and' the last time it appears; and

(B) by inserting before the final semicolon the following: `, and that subsidies under section 8 of the Housing Act of 1937 shall be renewe d for equal durations and in similar form to existing subsidies';

(2) in section 251(a)(6)(J), by striking `and' at the end there of;

(3) in section 251(a)(6)(K) by adding `and' at the end thereof; and

(4) in section 251(a)(6), by inserting after subparagraph (K) t he following new subparagraph:

`(L) assuming that spending will be adjusted appropriately for the decennial census.';

(5) in section 252(f)(2), by striking subparagraph (B) and inse rting the following:

`(B) Upon enactment of a full-year appropriation (including a continuing appropriation for the full year) for the account, the full amount of the sequestration specified by the final order, reduced by the sum of--< /ul>

`(i) amounts previously sequestered, and

`(ii) savings achieved by such appropriation measure wh en the amount enacted is less than the budget baseline for such account,

shall be sequestered, except that the sum shall not exceed th e amount specified in the final order for the account.';

(6) in section 257(11) by inserting at the end thereof the foll owing new paragraph:

`(V) the accounts (or portions of accounts) set forth on th e list entitled `Accounts Which Are Mandatory or Which Have Discretionary and Ma ndatory Splits and Are Scored to the Appropriations Committee' that is attached to the `Scorekeeping Guidelines for the Bipartisan Budget Agreement of April 14, 1989';

(7) in section 251(d)(3)(C) by striking `Congress' and insertin g `Senate and the House of Representatives';

(8) in section 252(c)(2)--

(A) in subparagraph (F)(ii) by striking `insofar as they re late to major function 050 (national defense).' and inserting `. For the purpose s of this clause, an amendment shall be considered to be relevant if it relates to function 050 (national defense).'; and

(B) in subparagraph (F)(iii) by--

(i) striking `22' and inserting `XXII';
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(ii) striking `resolution, and all' and inserting `reso lution. In the House of Representatives, all';

(iii) striking `is privileged in the Senate and is not debatable.' and inserting `is not debatable. The joint resolution is privileged in the Senate.'; and

(iv) striking `The motion is not subject to amendment' and inserting `In the House of Representatives, the motion is not subject to ame ndment';

(C) in subparagraph (H)(ii) by--

(i) striking `insofar as they relate to major function 050 (national defense)';

(ii) inserting after `in order in the Senate.' the foll owing: `For the purposes of this clause, an amendment shall be considered to be relevant if it relates to function 050 (national defense).'; and
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(iii) striking `the majority leader and the minority le ader (or their designees).' and inserting `, and controlled by, the mover and th e majority leader (or their designees), except that in the event that the majori ty leader favors the amendment, motion, or appeal, the minority leader (or the m inority leader's designee) shall control the time in opposition to the amendment , motion, or appeal.';

(D) in subparagraph (H)(iii) by inserting after `previousl y amended' the following: `, so long as the amendment makes or maintains mathema tical consistency';

(E) in subparagraph (I), by inserting `pending' after `Hous e, and the disposition of any';

(F) in subparagraph (L)(ii)(II)(bb)--

(i) by striking `it' and inserting `the Senate joint re solution';

(ii) by inserting `House' after `passed the';

(9) in section 254(a)--

(A) in paragraph (1)(B), by striking `the Department of Com merce preliminary reports of actual real economic growth (or any subsequent revi sion thereof)' and inserting `the most recent of advance, preliminary, and final reports of the Department of Commerce of actual real economic growth';

(B) in paragraph (2)(A), in paragraph (1) of the quoted mat erial, by striking `and 311(a)' and inserting `310(d), 311(a), 313(b)(1)(B), and 313(b)(1)(E)';

(C) in paragraph (2)(A), in paragraph (2) of the quoted mat ter, by striking `and 311(a) (except insofar as it relates to section 3(7))' and inserting `310(d), 311(a) (except insofar as it relates to section 3(7)), 313(b )(1)(B), and 313(b)(1)(E)';

(D) in paragraph (2)(A), in the quoted matter following par agraph (2) of the quoted material, by striking `resolution' and inserting `resol ution, but shall suspend any initial order that was issued under section 252(a) of that Act if the final order for the same fiscal year has not yet been issued by the date of the enactment of this joint resolution'; and

(E) in paragraph (4)(C), by striking the text of clause (i) and inserting `In the Senate, the joint resolution under this clause is privile ged. It shall not be in order to move to reconsider the vote by which the motion to proceed to the consideration of the joint resolution is agreed to or disagre ed to.';

(10) in section 251(e), by striking `preceding provisions of th is section' and inserting `provisions of this part';

(11) in section 258--

(A) in subsection (a), by inserting `or provide an alternat ive to reduce the deficit' after `section 252';

(B) in subsection (b)(2) by--

(i) striking `22' and inserting `XXII';
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(ii) inserting `the joint resolution is' after `The mot ion is highly privileged in the House of Representatives; and';

(iii) striking `The motion is not subject to amendment' and inserting `In the House of Representatives, the motion is not subject to am endment';

(C) in subsection (b)(3)(C)(ii)--

(i) by striking `or relevant'; and
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(ii) by striking `the majority leader and the minority leader (or their designees),' and inserting `, and controlled by, the mover and the majority leader (or their designees), except that in the event that the majo rity leader favors the amendment, motion, or appeal, the minority leader (or the minority leader's designee) shall control the time in opposition to the amendme nt, motion, or appeal.';

(D) in subsection (b)(4), by inserting `pending' after `any ';

(E) in subsection (b)(7)(B)(ii)(II) by--

(i) striking `it' and inserting `the Senate joint resol ution'; and

(ii) inserting `House' after `passed the';

(12) in section 256(a)(2), by adding at the end thereof the fol lowing: `For the purposes of a sequester in a fiscal year, no withholding from o bligation or expenditure shall be made from programs financed through special or trust funds in excess of the sequester percentage for such fiscal year.';< /ul>

(13) in section 256(f), by adding before the last sentence the following: `No State's matching payments from the Federal Government for foster care maintenance payments or for adoption assistance maintenance payments may be reduced by a percentage exceeding the domestic sequester percentage.';

(14) in section 275, by adding at the end thereof the following new subsection:

`(d) REGULATORY ACTIONS- Administrative actions implementing a sequ ester for a fiscal year shall not be effective to the extent that they are promu lgated within 90 days of the close of the fiscal year.';

(15) in section 256(a), by adding at the end thereof the follow ing new paragraphs:

`(3) MATCHING RATES- Except as specifically provided in this Ac t, no reduction may be made to a Federal matching rate to implement a sequester.

`(4) SEQUESTRATION WITHIN EACH PROGRAM, PROJECT, OR ACTIVITY- A dministrative actions implementing a sequester for a budget account shall be lim ited to reducing the budgetary resources for each program, project, or activity in that account, and allocating the post-sequester base thereto. To the extent t hat formula allocations differ at different levels of budgetary resources for a program, project, or activity, the sequester reduction is to be taken in a manne r consistent with the program allocation formulas in the substantive law.';

(16) in section 251(a)(5) by inserting after `laws enacted by,' the following: `treaties ratified by,';

(17) in section 251(c)(1)(A) by inserting after `laws enacted' the following: `, treaties ratified,';

(18) in section 252(b)(2) by inserting after `laws enacted' the following: `, treaties ratified,'; and

(19) in section 257, by adding at the end thereof the following new paragraph:

`(12) The term `deficit excess' means the amount by which the p rojected deficit for the fiscal year will exceed the maximum deficit amount for that fiscal year.'.

SEC. 12609. CODIFICATION OF PRECEDENT WITH REGARD TO CONFERENCE REPOR TS AND AMENDMENTS BETWEEN HOUSES.

Section 305(c) of the Congressional Budget Act 1974 is amended--

(1) in paragraph (1)--

(A) by striking the first sentence; and

(B) by inserting after `consideration of the conference rep ort' the following: `on any concurrent resolution on the budget'; and
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(2) in paragraph (2), by inserting `(or a message between House s)' after `conference report' each place it appears.

SEC. 12610. CONFORMING CHANGE TO TITLE 31.

(a) LIMITATIONS ON EXPENDING AND OBLIGATING- Section 1341(a)(1) of title 31 of the United States Code is amended--

(1) in subparagraph (A), by striking the final word `or';< /ul>

(2) in subparagraph (B)--

(A) by striking `law' and inserting `an Act of Congress'; a nd

(B) by striking the final period and inserting a semicolon; and

(3) by adding at the end thereof the following new subparagraph s:

`(C) make or authorize an expenditure or obligation of fund s required to be sequestered under section 252 of the Balanced Budget and Emerge ncy Deficit Control Act of 1985; or

`(D) involve either government in a contract or obligation for the payment of money required to be sequestered under section 252 of the Bal anced Budget and Emergency Deficit Control Act of 1985.'.

(b) LIMITATION ON VOLUNTARY SERVICES- Section 1342 of title 31 of t he United States Code is amended--

(1) by striking `law' and inserting `an Act of Congress'; and

(2) by inserting at the end thereof the following: `As used in this section, the term `emergencies involving the safety of human life or the pr otection of property' does not include ongoing, regular functions of government the suspension of which would not imminently threaten the safety of human life o r the protection of property.'.

Subtitle M--Budget Disclosure

SEC. 12651. DEBT INCREASE AS MEASURE OF DEFICIT.

(a) FINDINGS- The Congress makes the following findings:

(1) While the annual deficits, as defined under current law, ap pear to be decreasing, the Federal debt continues to increase annually by signif icantly greater amounts.

(2) Displaying the increase in the debt as a measure of the def icit would illuminate this discrepancy.

(b) DEBT INCREASE AS MEASURE OF DEFICIT-

(1) Section 1105 of title 31, United States Code, is amended by adding at the end thereof the following new subsection:

`(g) In the budget submission transmitted pursuant to subsection (a ), the President shall prominently display, for all fiscal years covered by that budget submission, a heading entitled `Debt Increase as Measure of Deficit' in which the President shall set forth the amounts by which the debt subject to lim it (in section 3101 of title 31, United States Code) has increased or would incr ease in each of the relevant fiscal years.'.

(2) Section 301(a) of the Congressional Budget Act of 1974, as amended by section 12152(c) is amended--

(A) in paragraph (6), by striking `and' at the end thereof;

(B) in paragraph (7), by striking the period at the end the reof and inserting: `; and'; and

(C) by adding at the end thereof the following new paragrap h:

`(8) a heading entitled `Debt Increase as Measure of Deficit' i n which the concurrent resolution shall set forth the amounts by which the debt subject to limit (in section 3101 of title 31 of the United States Code) has inc reased or would increase in each of the relevant fiscal years.'.

SEC. 12652. CONTINGENT LIABILITIES OF THE FEDERAL GOVERNMENT.
(a) PRESIDENT'S BUDGET- Section 1105(a) of title 31, United States Code, is amended by adding at the end thereof the following new paragraph:< /ul>
`(26) a disclosure of contingent liabilities of the Federal Gov ernment, in at least the detail that would be required if the Government were a private enterprise complying with generally accepted accounting principles.'.

(b) CONGRESSIONAL BUDGET ACT OF 1974- Section 202(f)(1) of the Cong ressional Budget Act of 1974 is amended by inserting before the period at the en d thereof the following: `, as well as a disclosure of contingent liabilities of the Federal Government, in at least the detail that would be required if the Go vernment were a private enterprise complying with generally accepted accounting principles'.

SEC. 12653. DISPLAY OF FEDERAL RETIREMENT TRUST FUND BALANCES.
(a) PRESIDENT'S BUDGET- Section 1105 of title 31, United States Cod e, as amended by section 12651(b)(1), is amended by adding at the end thereof th e following new subsection:

`(h) In the budget submission transmitted pursuant to subsection (a ), the President shall prominently display, for the fiscal year covered by that budget submission, a heading entitled `Display of Federal Retirement Trust Fund Balances' in which the President shall set forth the balances of the Federal ret irement trust funds.'.

(b) CONGRESSIONAL BUDGET ACT OF 1974- Section 301(a) of the Congres sional Budget Act of 1974, as amended by section 12651(b)(2), is amended--< /ul>
(1) in paragraph (7), by striking `and' at the end thereof;

(2) in paragraph (8), by striking the period at the end thereof and inserting `; and'; and

(3) by adding at the end thereof the following new paragraph:

`(9) a heading entitled `Display of Federal Retirement Trust Fu nd Balances' in which the concurrent resolution shall set forth the balances of the Federal retirement trust funds.'.

Subtitle N--Exercise of Rulemaking Powers

SEC. 12701. EXERCISE OF RULEMAKING POWERS.

This Act and the amendments made by this Act, other than those rela ting to the activities of the executive and judicial branches of the Government, are enacted by the Congress--

(1) as an exercise of rulemaking power of the Senate and the Ho use of Representatives, respectively, and as such they shall be considered as pa rt of the rules of each House, respectively, or of the House to which they speci fically apply, and such rules shall supersede other rules only to the extent tha t they are inconsistent therewith; and

(2) with full recognition of the constitutional right of either House to change such rules (so far as they relate to such House) at any time, i n the same manner, and to the same extent as in the case of any other rule of su ch House.

TITLE XIII--SOCIAL SECURITY PRESERVATION

SEC. 1301. SOCIAL SECURITY PRESERVATION ACT.

(a) SHORT TITLE- This section may be cited as the `Social Security Preservation Act'.

(b) DEFINITION OF DEFICIT- (1) The second sentence of paragraph (6) of section 3 of the Congressional Budget and Impoundment Control Act of 1974 (2 U.S.C. 622(6)) is repealed.

(2) Section 275(b)(2)(A) of the Balanced Budget and Emergency Defic it Control Act of 1985 (2 U.S.C. 901 note) is amended by striking out `and the s econd sentence of section 3(6) of such Act (as added by section 201(a)(1) of thi s joint resolution)'.

(c) SOCIAL SECURITY ACT- Subsection (a) of section 710 of the Socia l Security Act is amended by striking `shall not be included in the totals of th e budget' and inserting `shall not be included in the budget deficit or any othe r totals of the budget'.

(d) EFFECTIVE DATE- The amendments made by subsections (b) and (c) shall apply with respect to fiscal years beginning after September 30, 1990.

TITLE XIV--REDUCTION OF PAY FOR MEMBERS

SEC. 1401. REDUCTION OF PAY OF MEMBERS OF CONGRESS.

(a) REDUCTION IN PAY- For each month during fiscal year 1991 in whi ch, by reason of a furlough or other employment action necessitated by a sequest ration order under section 252 of the Balanced Budget and Emergency Deficit Cont rol Act of 1985 (2 U.S.C. 902), the total amount of the pay paid to any Federal employee is projected to be less than the monthly equivalent of the annual rate of pay established for such Federal employee pursuant to law, the rate of pay pa yable to a Member of Congress shall be reduced to the rate of pay established fo r such Member pursuant to law.

(b) COMPUTATION OF REDUCED PAY- The rate of pay payable to a Member of Congress for any month referred to in subsection (a) shall be equal to the a mount determined by multiplying the rate of pay established for such Member purs uant to law by the percentage reported to Congress for such month under subsecti on (c)(1)(D).

(c) DETERMINATION OF PERCENTAGE FOR COMPUTATION OF REDUCED PAY- (1) No later than the first day of each month in fiscal year 1991, the Director of the Office of Management and Budget shall--

(A) determine whether, for a reason described in subsection (a) , the total amount of pay paid to any Federal employee in that month is projecte d to be less than the monthly equivalent of the annual rate of pay established f or such Federal employee pursuant to law;

(B) estimate the average of the percentages that would result b y dividing the monthly equivalent of the annual rate of pay established for each such Federal employee pursuant to law into the total amount projected to be pai d such Federal employee for such month;

(C) aggregate the percentages determined under subparagraph (B) for Federal employees for each agency and determine the highest average percent age for any agency; and

(D) transmit to Congress a written report containing the averag e computed under subparagraph (C).

(2) The Office of Management and Budget may use a statistical sampl ing method to make the estimates and determinations under paragraph (1).
(3) For purposes of this section, the term `agency' means an Execu tive agency as defined under section 105 of title 5, United States Code.
(d) APPLICATION TO OTHER FEDERAL LAWS- For the purpose of administe ring any provision of law, rule, or regulation which provides premium pay, retir ement, life insurance, or any other employee benefit, which requires any deducti on or contribution, or which imposed any requirement or limitation, on the basis of a rate of salary or basic pay, the rate of salary or basic pay payable after the application of this section shall be treated as the rate of salary or basic pay.

(e) EFFECTIVE DATE- The provisions of this section shall take effec t on the date of the enactment of this section and shall apply to the first appl icable pay period of members of Congress or Executive officers and employees occ urring on or after October 1, 1990. If the date of enactment of this section is after October 1, 1990, and the provisions of this section become applicable in t he reduction of pay of members of Congress or Executive officers and employees, all reductions which would have occurred if this section had been enacted as pro vided in subsection (b) and the amount of such reduction shall be recovered for the remaining pay periods for Fiscal Year 1991.

(f) APPLICATION TO EXECUTIVE OFFICERS- The provisions of this secti on and the computations as they apply to the reduction under subsection (b) shal l apply to the rate of pay for the Vice President, and any executive officer at a position level V or above of the Executive Schedule under sections 5311 throug h 5317 of title 5, United States Code, any executive officer or employee in the Executive Office of the President who on the date of the enactment of this secti on is paid at a pay rate equal to or above the pay rate for a position at level V or above of the Executive Schedule under Sections 5311 through 5317 of title 5 , United States Code.

Attest:
Secretary.